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Speaker 1: This is Bloomberg Surveillance. You can't count on the United

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Speaker 1: States providing all the demand for the world. We can't

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Speaker 1: be the consumer first and last resort. There needs to

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Speaker 1: be more. I think the Fed got it right last

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Speaker 1: December when they said they would have four increases this year.

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Speaker 1: Investment really is the global issue that we're facing a

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Speaker 1: shortage of right now, and that's really holding back the

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Speaker 1: global economies. Bloomberg Surveillance your link to the world of economics, finance,

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

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Speaker 1: Michael McKee and Tom Keene. We welcome you on a

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Speaker 1: Monday to super Monday for us on economics, finance, investment,

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Speaker 1: international relations, indeed a little bit of politics as we

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Speaker 1: go to the set of elections that we see tomorrow.

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Speaker 1: Is always Bloomberg Surveillance for a bunch of by Marx

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Speaker 1: Panneth LLLP, ranked among the top three forensic accounting firms

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Speaker 1: in New York by the New York Law Journal for

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Speaker 1: the six six s I X T H six year

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Speaker 1: in a row. Visit Marks Panneth dot com m A

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Speaker 1: r K S Panneth p A N E t H

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Speaker 1: Marks panneth dot com. I've been waiting for this all weekend.

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Speaker 1: Mike's going to bring him in. The paper then had

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Speaker 1: a strong set of authors David Greenlaw iconic at Morgan Stanley,

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Speaker 1: Peter Hooper of Deutsche Bank and with terrific I m

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Speaker 1: f experience, Frederick Michigan with a terrific textbook, a macro

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Speaker 1: Economics of former FED governor and I'm your Sufi who

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Speaker 1: owns Fiscal Debt Analysis, and Mike. There was another guy

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Speaker 1: who helped with the paper, Michael Paroli, JP, Borgan Security

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Speaker 1: Chief US Economists. We should point out this is Friday.

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Speaker 1: The Chicago Booth School every year holds a Monetary Policy Forum,

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Speaker 1: which has become the eventbo interested in what monetary policies UH,

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Speaker 1: the challenges and the options for monetary policy edits once

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Speaker 1: a year and it is the the biggest hitters in

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Speaker 1: economics and monetary policy all over the country exactly. UH

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Speaker 1: and Michael Fauli selected as a sort of lead author

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Speaker 1: on paper UM on what the FEDS supposed to do

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Speaker 1: about communications. This is one of the longer papers I've

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Speaker 1: ever read, because the FED has some significant issues in

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Speaker 1: terms of how it communicates with the markets, and I

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Speaker 1: don't think that's a surprise to anybody. But the group

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Speaker 1: you mentioned put together some recommendations on what the FED

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Speaker 1: should be doing, and we welcome Michael to talk about

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Speaker 1: it with us. Obviously, the FEDS had problems throughout the

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Speaker 1: financial crisis in communicating its policies. But you start in

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Speaker 1: the paper, Mike, with the from the basis that as

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Speaker 1: they normalize policy, communications becomes even more of a challenge.

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Speaker 1: That's right. I think, Uh, you know, when they were

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Speaker 1: at the zero bound, there were some um, I think

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Speaker 1: clear communication layups, in particular their ability to kind of

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Speaker 1: uh state that they were going to stay low for

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Speaker 1: a very extended period and give some calendar dates to

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Speaker 1: what they meant by that. I think now that we're

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Speaker 1: getting away somewhat from the zero lower bound, that raises

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Speaker 1: some different issues about what, you know, what constitutes best

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Speaker 1: policy in terms of communications about the the future path

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Speaker 1: of interest rates. Well, it's easy to say we don't

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Speaker 1: like the way you communicated, and here's a different phrase

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Speaker 1: you should use, But how did you go through and

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Speaker 1: quantify the feds issues, uh, the way economists tend to

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Speaker 1: do and figure out where the problems are. Yeah, you know. So,

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Speaker 1: first of all, I think we want to give the

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Speaker 1: FED credit. They have come a long way from where

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Speaker 1: they were in the early nineties when they didn't even

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Speaker 1: communicate anything to the markets. Uh. And generally speaking, they

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Speaker 1: are attempting to, I think, do the right thing, and

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Speaker 1: theory would say that the right thing is to communicate

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Speaker 1: a path that is very data dependent. So rather than

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Speaker 1: give you know, a specific time horizon or say how

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Speaker 1: many hikes we're going to do this year next year, Uh,

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Speaker 1: you know, best policy would suggest that they try to

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Speaker 1: convey to the market what matters to the feed and

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Speaker 1: how the FED will react as as the data have changed.

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Speaker 1: So they've done that. But you know what we did

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Speaker 1: was to kind of look at how, um, how rates

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Speaker 1: respond to data surprises, and if the FED isn't conveying

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Speaker 1: an expectation that is data depending, we'd expect to see

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Speaker 1: the market respond less to data and more to set communications,

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Speaker 1: which at times has happened. Um. And you know part

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Speaker 1: of that is, you know what I just described as

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Speaker 1: Syrian theory. Uh, have met an imperfect world where sometimes

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Speaker 1: you know, the market just doesn't understand what the FET

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Speaker 1: is saying, so they have to say it more bluntly

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Speaker 1: and say, you know, we're not gonna high rates for

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Speaker 1: you know, x x amount of time. Um, but ideally,

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Speaker 1: you know, I think as we get away from the

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Speaker 1: zero bound, uh would be ideal is for the Fed

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Speaker 1: to um to continue to communicate, Uh not so much. Hey,

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Speaker 1: we're gonna hike four times this year or two times

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Speaker 1: this year, but we're going to respond as we get

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Speaker 1: closer to our mandate and really, you know, hammer home

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Speaker 1: what the mandate is rather than X amount of dots,

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Speaker 1: you know, having a certain amount of rad hikes. I look,

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Speaker 1: Michael Foley, congratulations on the paper. You've got a great

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Speaker 1: set of papers sited in the back, including two paper

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Speaker 1: which I call the toolbox paper. Rick Michigan, who helped

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Speaker 1: you write the paper twelve years ago? Can Central Bank

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Speaker 1: transparency go too far? Why are we still asking this question?

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Speaker 1: I mean Rick was way out front on this, as

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Speaker 1: he always is, but that was twelve years ago and

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Speaker 1: we're asking the same question. Yeah. So you know, I

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Speaker 1: think at the time, Rick was partly asking about, uh,

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Speaker 1: you know, whether FED meetings should be televised. Uh. Um.

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Speaker 1: That seemed to be a bad idea, and I think

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Speaker 1: that generally still is a bad idea. Uh, And I

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Speaker 1: think there's now a slightly different issue, which is, you know,

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Speaker 1: if the FED in December, if the median person thought

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Speaker 1: there was four hikes was the most likely thing, does

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Speaker 1: it actually help to say that? Or does it because

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Speaker 1: you know that that medium person felt that way the

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Speaker 1: economy which may be changing. And if the market only

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Speaker 1: here is the four hikes but doesn't hear the part about, uh,

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Speaker 1: the economy changing, then then there's I think a risk,

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Speaker 1: a risk of misperception. Would you get rid of the dots?

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Speaker 1: I think you know, I have to say, are our

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Speaker 1: group of authors kind of cleaved on this issue? UM?

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Speaker 1: I would probably favor getting rid of the dots. I

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Speaker 1: think you either have to get rid of them or

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Speaker 1: improve them. I would favor getting rid of them because

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Speaker 1: I think improving them is going to be difficult. But

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Speaker 1: there is an argument that you know, if you add

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Speaker 1: things like fan charts and so forth, that you could

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Speaker 1: further convey the uncertainty that's um embedded in those dots.

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Speaker 1: But I think the simplest thing maybe just to get

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Speaker 1: get rid of them, that they may have outlived their usefulness.

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Speaker 1: You know what, I think you see that particularly in

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Speaker 1: this period since since December, where the FED has been

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Speaker 1: getting a lot of grief from commentators about, you know,

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Speaker 1: how out of touch their forecast is. Well, you know again,

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Speaker 1: things change and the FEDS jobs isn't unlike many of

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Speaker 1: us to be you know, great forecasts is to react

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Speaker 1: to what is changing in the economy. And you know,

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Speaker 1: arguably some you know, some things have changed since December.

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Speaker 1: And so if the dots are gonna you know, kind

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Speaker 1: of have this uh misperception attending to them, then maybe

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Speaker 1: it's better just to get rid of them. But you

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Speaker 1: know so I think you either get rid of them

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Speaker 1: or or improved them by UM emphasizing uncertainty in the outlook.

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Speaker 1: The dots flow from the Survey of Economic Projections, which

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Speaker 1: the FIT puts out four times a year, basically their

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Speaker 1: views in individual views on what the economy is going

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Speaker 1: to do. The interesting and you look at the SEP

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Speaker 1: in the paper, UM, and whether or not it should

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Speaker 1: be retained or changed. An interesting thing to me is

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Speaker 1: if you look at what the FED forecast for two

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Speaker 1: thousand and sixteen, the economy is performing better in every category,

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Speaker 1: better in every category. Yeah, that's gonna be a tricky, UM.

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Speaker 1: Issue when you get to the March meeting in two

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Speaker 1: weeks time, is that if you're getting closer to the

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Speaker 1: mandate on both inflation and employment, why then would you

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Speaker 1: be taking out a lot of rate hikes in the dots.

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Speaker 1: Now two reasons for that. One I think is the

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Speaker 1: move down in some survey measures of inflation expectations probably

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Speaker 1: got them a little bothered. Uh. And then the second

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Speaker 1: thing is I think some of the development and financial

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Speaker 1: markets may tell them that, Okay, well, this year, you know,

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Speaker 1: so far we're tracking better. Financial markets are adding some

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Speaker 1: downside risk to both employment and inflation. But but you're

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Speaker 1: absolutely right that uh uh, inflations already now above where

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Speaker 1: they thought it would be at in the fourth quarter

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Speaker 1: of this year, and we're only two tenths above their

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Speaker 1: fourth quarter unemployment rate forecasts. So um, you know, arguably

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Speaker 1: we're getting pretty close to you know, they're both of

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Speaker 1: their goals. Well, what what was the conclusion in terms

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Speaker 1: of the survey of economic projections? In terms of whether

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Speaker 1: that needs to be changed? You know, I think in

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Speaker 1: terms of the economic forecasts, uh, I don't think that

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Speaker 1: itself has too many problems with that. I think the

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Speaker 1: market understands that their views on UM, you know, growth inflation,

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Speaker 1: UH have uncertainty. And you also have to remember that

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Speaker 1: they're required to publish that twice a year, So publishing

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Speaker 1: the economic forecast four times year, I don't think as

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Speaker 1: much of a problem. I think it's more the issue

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Speaker 1: of publishing the interest rate forecasts and whether that is

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Speaker 1: confusing the market. The kind of to have this feeling

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Speaker 1: that plan rather than maybe if they all had a

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Speaker 1: thoughtful pipe in their hands, smoking their pipe while they

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Speaker 1: were speaking, I would cut down in the communication. That's

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Speaker 1: my careful analysy. That's true. We'll show cigar probably we'll

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Speaker 1: come back with Michael Faroli if JP Morgan to address

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Speaker 1: the immediate American economy and of course is a truly

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Speaker 1: outstanding research and call on the terminal value where we're

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Speaker 1: going our potential GDP. If you will, we'll touch on that.

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Speaker 1: Really must must listen Michael Faroli out in our podcast

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Speaker 1: look for them out at iTunes Bloomberg Surveillance, Michael McKee

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Speaker 1: and Tom Keane sure to bring them back to our

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Speaker 1: individual podcasts and the whole length of the program as well.

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Speaker 1: Futures negative three time out of bringing Michael Arr and

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Speaker 1: get the latest world of national headlines. Michael, Mike, Tom,

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Speaker 1: thank you very much. Presidential hopeful those are in the

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Speaker 1: final flurry if campaigning for supporting states that will be

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Speaker 1: voting in tomorrow's Super Tuesday contests. Hillary Clinton and Bernie

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Speaker 1: Sanders will be in Massachusetts today. Donald Trump is clarifying

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Speaker 1: his comments about his stance on receiving support from former

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Speaker 1: Ku Klux Klan leader David Duke. Trump on Sunday was

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Speaker 1: asked on CNN whether he rejected support from Duke. Trump replied,

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Speaker 1: I don't know anything about David Duke. This morning on

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Speaker 1: NBC's Today Show, he said he was given a very

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Speaker 1: bad earpiece for the interview and that he disavowed David

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Speaker 1: Duke all weekend long on Facebook and on Twitter. The

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Speaker 1: movie Spotlight one for Best Picture this year's Academy Awards.

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Speaker 1: from around the world. I'm Michael Barn, my time, Michael Barr,

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Speaker 1: Thanks so much for an exchange. Yen weaker one oh seven.

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Speaker 1: Uh interesting this morning? One oh excuse me stronger, I

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Speaker 1: should say that's the second time I've been spoken that

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Speaker 1: today was have stayed up too late for the oscars

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Speaker 1: yen stronger. I got that right, stay of its Bloomberg surveillance.

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Speaker 1: Business Flash and I'm Karen Moscow. And futures are moving

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Speaker 1: lower this morning. Let's go to the First Marty Breaking

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Speaker 1: news desk for today's morning call. Here's Bill Maloney. Good

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Speaker 1: morning Bill, Good morning Karen. U s. Futures have paired

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Speaker 1: some of the losses since the last time we spoke. Down.

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Speaker 1: Futures now down twenty nine points has to be dropped

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Speaker 1: three in n asset futures fall by thirteen Earlier this morning,

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Speaker 1: China cut reserve requirement ratio by fifty basis points, and

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Speaker 1: RPM markets have either paired or reversed their losses. Spain

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Speaker 1: is training higher by point six per cent on the

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Speaker 1: US economic front. At nine o'clock, I s M Milwaukee,

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Speaker 1: at five Chicago Purchasing Manager. At ten o'clock Penning Home Sales,

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Speaker 1: and at ten thirty Dallas Fed and jil News. Chevron

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Speaker 1: setaway sale that's Asian Germo thermal energy operations could fetch

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Speaker 1: as much as three billion, and Federal Mogul gets a

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Speaker 1: seven dollars share merger offer from carl Icon and other news.

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Speaker 1: Valian c O to return from medical leave company with

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Speaker 1: rout guidance. Finally, some of your key wall shoot upgrades

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Speaker 1: and downgrades. GM cuts a hole versus by at argust

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Speaker 1: at Citygroup, Gold Corps cut to neutral, KBR raised to neutral,

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Speaker 1: Dillard's cut the cell over at Deutsche Bank, Campbell Super

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Speaker 1: raised to neutral versus sell over at Goldman Sachs. And finally,

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Speaker 1: Newfield expiration raised a strong by over at Raymond James

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Speaker 1: Live from the First Breaking News Desk, Gombo Maloney, Karen Lay,

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Speaker 1: thanks Villa to hear live breaking news over your Bloomberg

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Speaker 1: type squawk a goo on your terminal. That's a Bloomberg

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Speaker 1: business flash, Tom and Mike Karna thanks so much This

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Speaker 1: Monday works surveillance, weren't you buy Investco? Investco believes it's

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Speaker 1: time to bench the benchmarks to consider active management and

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Speaker 1: factor based strategies. Find out more at investco dot com

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Speaker 1: slash high conviction. Their chief US economist JP Morgan. Michael

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Speaker 1: Faroli with us this morning. Michael, you did path breaking

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Speaker 1: work on the new terminal value or interest rates are

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Speaker 1: heading towards a lower potential g d P. Have you

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Speaker 1: recalibrated that call? Have you nudged it lower? We're actually

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Speaker 1: in the process of recalibrating. Makes some news, come on,

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Speaker 1: make some news one. Uh, we're in the process of

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Speaker 1: recalibrating it. And as you might suspect lower just given

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Speaker 1: realized um productivity outturns and some of the developments we're seeing,

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Speaker 1: that suggests that productivity growth probably will stay subdued in

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Speaker 1: the foreseeable future. Um so, Uh, the path of tin

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Speaker 1: growth does not look part recularly booming, at least compared

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Speaker 1: to our own past experience. Do you see a recession

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Speaker 1: out there? Well, um, I wouldn't say for this year

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Speaker 1: we're looking for a recession, but you know, all things

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Speaker 1: come to an end and we're probably closer to the

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Speaker 1: end of this cycle than the beginning. I think pinning

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Speaker 1: down that timing is difficult, but I would say within

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Speaker 1: the next two or three years the yachts probably rise

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Speaker 1: above fifty, if for no other reason than going to

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Speaker 1: employment rate is already close to NEHRU and declining profit

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Speaker 1: margins have peeked in our coming down, and the said

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Speaker 1: at some point will need to respond to some of

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Speaker 1: the evidence of growing you know, you know, labor cost pressures.

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Speaker 1: So not for this year, but I would say, you know,

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Speaker 1: I think like seventeen or eighteen, you probably are getting

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Speaker 1: into some risky territory. Well, in other words, are the

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Speaker 1: market too early on this. I mean, they seem to

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Speaker 1: think we're going to see a recession in the immediate future. Um,

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Speaker 1: you know, if that's what It's always difficult to know

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Speaker 1: exactly what the markets are saying. But I would think

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Speaker 1: the immediate future, you know, this year might be a

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Speaker 1: little too soon. If from you know, as I said,

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Speaker 1: I think the FED it's gonna be pretty gradual in

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Speaker 1: terms of putting you know, tapping on the brakes. So generally, uh,

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Speaker 1: you know, recession dynamics do need some said complicity to

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Speaker 1: kind of finish the act, and with prices still remaining

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Speaker 1: you know, pretty well contained thanks to some global pressures,

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Speaker 1: I think, uh, you know, we're missing that one kind

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Speaker 1: of critical ingredient, which is a more aggressive set. So

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Speaker 1: I don't think we're headed for recession this here, but

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Speaker 1: it is a you know, a game of odds where

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Speaker 1: you can't really be on a sensor. Well then, uh,

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Speaker 1: the market's overreacting at this point to the G twenty.

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Speaker 1: I mean, who would G twenty suggests the fun medals

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Speaker 1: are better than we think they are? Um, you know,

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Speaker 1: to be honest, I've never really I know, these G

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Speaker 1: meetings kind of come and go, and I've never been

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Speaker 1: a long while since any of them really gave me

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Speaker 1: much to um, I think my teeth into so uh,

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Speaker 1: I just didn't see a whole lot there. Well, there

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Speaker 1: wasn't a whole lot there, which maybe disappointment in Muhammadallaria

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Speaker 1: and is suggesting that they should have come up with

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Speaker 1: some sort of fiscal stimulus, which of course everybody knew

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Speaker 1: they weren't. It's easy for a bunch of finance minister

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Speaker 1: central pancras to say that. But then if you have

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Speaker 1: to go back home and you know, sell it to

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Speaker 1: your commures, their parliaments. That's where it gets a Mike,

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Speaker 1: I'm glad you went here. What is the color of

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Speaker 1: our austerity right now? Is the US austerer as Ireland

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Speaker 1: went to the pole with their own unique calculus, or

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Speaker 1: the United Kingdom struggles with it in other nations as well?

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Speaker 1: Are we all steer? Michael FIRLEI, I would say, aren't we?

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Speaker 1: The UH fiscal policy looks to be pretty close to neutral. UH.

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Speaker 1: In other words, the government sector is basically expanding kind

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Speaker 1: of in line with the overall GDP growth, So it's

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Speaker 1: neither a stimulative nor off there. I mean, it had

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Speaker 1: been off the here for a couple of years, and

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Speaker 1: some would argue that that UH slowed the pace of recovery,

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Speaker 1: and probably with some some reason. But I think currently

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Speaker 1: right now we're we're pretty close to neutral when it

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Speaker 1: comes to the US fiscal policy. Michael Farley, thank you

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Speaker 1: very much. Just super congratulations Michael, uh Early, David green Law,

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Speaker 1: Peter Hooper, Frederick S Michigan and I'm your Sufie. Can

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Speaker 1: we sell I'm Your Sufie's book right now? It is

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Speaker 1: a superb short treaties on the debt it might give

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Speaker 1: you read it. Yes, it is superb. It was just

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Speaker 1: super He was on the show already do that on

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Speaker 1: social here at some point. Yeah, you know, we we

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Speaker 1: admire all them. And it was a great deep dive

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Speaker 1: this paper into fed communications which matter a lot to

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Speaker 1: the markets going forward. We have seen that. Uh and

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Speaker 1: we also tip of the hat to the Booth School

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Speaker 1: for inviting us and gets bigger every year. It's just

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Speaker 1: an enormously valuable Everybody says a meeting Madison Square Garden

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Speaker 1: next year. Uh, sure, why not. We'll we'll get the uh,

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Speaker 1: the Boomberg Suite. Maybe they'll bring the Chicago black Hawks

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Speaker 1: Stanley Cup. Did you see the trades that the black

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Speaker 1: Hawks made? Yeah, Vicars gearing up a couple of trades

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Speaker 1: from the Washington Capitals, and of course Eric Style goes

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Speaker 1: to the New York Rangers. Three o'clock this afternoon is

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Speaker 1: the trade deadline? Not that? Well, well, well, we will

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Speaker 1: have a full analysis onillance analysis of the National Hockey League.

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Speaker 1: We'll do that tomorrow. Michael McKee and I we will

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Speaker 1: be in Washington tomorrow FM Washington on Super Tuesday. This

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Speaker 1: is Bloomberg Surveillance coming up there with all due respect.

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Speaker 1: Highlight brought to you by land Rover. If it's in

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Speaker 1: your nature to cast off the every day and seek adventure,

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Speaker 1: beyond broadcasting live to New York, Cloomberg eleventh Rio to Washington,

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

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Speaker 1: Bloomberg to the Country series SAM Channel one nine and

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Speaker 1: around the globe the Bloomberg Radio Plus Appen Bloomberg dot com.

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

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Speaker 1: on Wall Street. I Michael McKee along with Tom Keene.

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Speaker 1: Economic Indicators brought to you by Commonwealth Financial Network. When

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Speaker 1: it's time to change the conversation, talk with the broker

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Speaker 1: dealer r I A that's ready to listen, call eight

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00:20:56,160 --> 00:20:59,680
Speaker 1: six six six two or visit Commonwealth dot com to

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Speaker 1: learn more. Kind of an odd day because ordinarily we

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Speaker 1: would be heading into jobs week with something like the

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Speaker 1: I S M Reporters or whatever toime. But it is

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Speaker 1: the twenty nine of February. We don't have twenty ninth

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Speaker 1: of February very often, so we have um some cats

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Speaker 1: and dogs of indicators, none of which are coming out

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Speaker 1: at a thirty at the Chicago Purchasing Managers expected to

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Speaker 1: fall to fifty two and a half an Impending home

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Speaker 1: sales there forecast to be higher by half a percent.

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Speaker 1: Those are the big deals later today. Also the Dallas

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Speaker 1: Fed manufacturing activity that you've got to expect um since

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Speaker 1: it covers the area that has oil, is going to

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Speaker 1: be show me, Mike, you're this is what you're so

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Speaker 1: good at I s M manufacturing tomorrow morning. First look

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Speaker 1: for the first month March three is that number is

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Speaker 1: still a big deal. If service sector is a bigger

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Speaker 1: part of our economy, it's still a big deal for

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Speaker 1: a couple of reasons. One, people are concerned about jobs

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Speaker 1: and income in the manufacturing sector. There a few. It

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Speaker 1: gives a picture of where the economy is going. It's

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Speaker 1: also a very old number. We've had many, many decades

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Speaker 1: of I s M numbers, so it does give economists

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Speaker 1: a chance to you know, benchmarket compared against previous business cycles.

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Speaker 1: It is expected to still be native tomorrow Economist forecasting

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Speaker 1: forty eight point five. That's up from forty eight point

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Speaker 1: two fifty the rough break even line for expansion and

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Speaker 1: contraction in that area. Air Quissman with us right now

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Speaker 1: with MFS Massachusetts Financial Services, Boston. Eric Weissman, Dr weisman

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Speaker 1: Um writes a lot on bonds and their strategy forward

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Speaker 1: and also beautifully dovetails it into the larger picture. Dr Weissman,

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Speaker 1: good morning, What is your greatest distraction right now? There's

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Speaker 1: so many of them. It's it's it's like a Howard

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Speaker 1: Johnson's list of flavors. It sure is. You know, when

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Speaker 1: we were ending two thousands fifteen, there were a handful

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Speaker 1: of issues that we were really focusing on, most specifically

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Speaker 1: oil and China and the dollar. And as we've entered

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Speaker 1: into two thousand and sixteen, we get to add a

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Speaker 1: few other onto the list, and those would include negative

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Speaker 1: rates and whether they're credible and whether they can help

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Speaker 1: or whether that's a bridge too far, and financials in

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Speaker 1: Europe and these flattening yield curves that continue to impact

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Speaker 1: the financials negatively, So a whole plethora of things to

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Speaker 1: be concerned about. You have as you do there's always

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Speaker 1: these these single sentence statistics, and Weissman's writing, I didn't

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Speaker 1: know this, folks. In the wake of the global financial crisis,

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Speaker 1: value added tax hikes outnumbered tax cuts eighteen to one.

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Speaker 1: That speaks to our austerity, doesn't it. We need to

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Speaker 1: rate taxes if we're not going to reform the social

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Speaker 1: safety that there's no other way that we can pay

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Speaker 1: for all these things. Uh. I would say that the

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Speaker 1: missing link of all of our policies, our monetary policy,

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Speaker 1: which I think is out over at skis our fiscal

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Speaker 1: policy that has gotten us perhaps into some of this mess.

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Speaker 1: Our foreign exchange policy is structural. It's all now about

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Speaker 1: structural policy, and that's difficult. That's not the low hanging fruit,

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Speaker 1: and nobody wants to do it. What would you do

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Speaker 1: if if you could change something? Well, I think that

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Speaker 1: you really need to incentivize people to stay in the

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Speaker 1: labor force longer. You need to incentivize a higher participation rate.

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Speaker 1: We need to get rid of rigidities and product markets,

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Speaker 1: which is a big issue in Europe and most importantly

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Speaker 1: in the United States. I think we need to reform

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Speaker 1: the tax code, and we need entitlement reform and These

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Speaker 1: would be things that would really raise confidence in the

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Speaker 1: market and allow us to believe that there is a

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Speaker 1: long term path out of this current malaise. On a

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Speaker 1: scale of one to ten, one of the odds any

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Speaker 1: of that happens well. Not unlike interest rates by European

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Speaker 1: policy makers, I would say it's negative negative one negative too.

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Speaker 1: It's not between one intent. It is very unfortunate. Well,

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Speaker 1: all right, we have negative rates in Europe UM at

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00:25:17,840 --> 00:25:20,680
Speaker 1: this point, we have inflation rising in the United States,

428
00:25:20,720 --> 00:25:24,360
Speaker 1: and we're gonna see significant divergence over the year. European

429
00:25:25,040 --> 00:25:29,560
Speaker 1: UM inflation fell significantly in the numbers announced today. It

430
00:25:29,720 --> 00:25:31,960
Speaker 1: did so, we had numbers come out this morning that

431
00:25:32,160 --> 00:25:35,200
Speaker 1: we're lower and lower than expected UH, and I think

432
00:25:35,280 --> 00:25:38,080
Speaker 1: that we are beginning to see some wage pressures in

433
00:25:38,119 --> 00:25:41,600
Speaker 1: the US. We'll see how well that translates into headline

434
00:25:41,640 --> 00:25:45,840
Speaker 1: and core cp I UH. In Europe, we're not seeing that.

435
00:25:46,000 --> 00:25:48,320
Speaker 1: It makes sense. Our unemployment rate in the United States

436
00:25:48,400 --> 00:25:51,560
Speaker 1: is around five, and we could quibble about how we

437
00:25:51,600 --> 00:25:54,720
Speaker 1: measure that, and in Europe it's ten. So we may

438
00:25:54,760 --> 00:25:57,680
Speaker 1: be getting close to that non accelerating inflation rate of

439
00:25:57,760 --> 00:26:01,720
Speaker 1: unemployment in the US. In Europe they're not close, so

440
00:26:02,080 --> 00:26:07,400
Speaker 1: they shouldn't see that wage increase creep into higher headline

441
00:26:07,440 --> 00:26:10,080
Speaker 1: inflation in Europe very quickly. Here will come back when

442
00:26:10,160 --> 00:26:15,320
Speaker 1: does the financial repression? And Eric Weisson, I don't think

443
00:26:15,359 --> 00:26:17,600
Speaker 1: that it ends in this cycle. And I think the

444
00:26:17,800 --> 00:26:21,040
Speaker 1: very fact that monetary policy makers are willing to go

445
00:26:21,320 --> 00:26:25,159
Speaker 1: so far off the beaten track would tell you that

446
00:26:25,400 --> 00:26:29,359
Speaker 1: they believe they can still influence policy in a positive way,

447
00:26:29,880 --> 00:26:32,080
Speaker 1: and they will try and keep rates as low as

448
00:26:32,200 --> 00:26:35,600
Speaker 1: possible for as long as possible. Eric Quisson with a Boston,

449
00:26:35,680 --> 00:26:39,320
Speaker 1: Massachusetts Financial Service MFS, will to speak with him. He

450
00:26:39,680 --> 00:26:42,399
Speaker 1: manages bond funds. Will talk about yield here more specifically

451
00:26:42,960 --> 00:26:49,400
Speaker 1: portfolio dynamics in excuse me in a bit, equities, bonds, currencies, commodities,

452
00:26:49,440 --> 00:26:53,880
Speaker 1: what we're known for. Futures churning, the VIX closing nineteen

453
00:26:53,960 --> 00:26:58,560
Speaker 1: point eight one inside more complacent over its two decade

454
00:26:58,960 --> 00:27:02,520
Speaker 1: average of just above twenty good stock market over the

455
00:27:02,640 --> 00:27:06,840
Speaker 1: last week or two of the yield flat now one

456
00:27:06,920 --> 00:27:10,800
Speaker 1: point seven five percent. Yiels are lower Earlier, UH West

457
00:27:10,840 --> 00:27:13,440
Speaker 1: Texas a little green up eighteen cents, bring up fifty

458
00:27:13,480 --> 00:27:18,560
Speaker 1: two cents, thirty five sixty two on European global rent oil,

459
00:27:18,640 --> 00:27:23,840
Speaker 1: gold up seven the ounce yen. Maybe I'll get it

460
00:27:23,960 --> 00:27:27,719
Speaker 1: right this time stronger yen one three, euro weaker one

461
00:27:28,160 --> 00:27:31,560
Speaker 1: eighty with d x y stronger point three four, the

462
00:27:31,640 --> 00:27:38,320
Speaker 1: dollar index stronger. Time you take in with Michael Mayer,

463
00:27:38,359 --> 00:27:41,000
Speaker 1: I get the latest world in national headlines, Michael by time,

464
00:27:41,040 --> 00:27:44,879
Speaker 1: Thank you very much. Super Tuesday voting is tomorrow. Hillary

465
00:27:44,920 --> 00:27:48,440
Speaker 1: Clinton and Bernie Sanders were both campaign in Massachusetts today.

466
00:27:48,920 --> 00:27:51,760
Speaker 1: Clinton arald at Sanders in South Carolina over the weekend.

467
00:27:52,119 --> 00:27:55,560
Speaker 1: Republican front runner Donald Trump continues to face sharp attacks

468
00:27:55,600 --> 00:27:58,960
Speaker 1: from his main rivals Tad Cruz and Marco Rubio. North

469
00:27:59,080 --> 00:28:03,840
Speaker 1: Korean authorities presented a detained American student to foreign media today.

470
00:28:04,400 --> 00:28:08,400
Speaker 1: University of Virginia student Auto Warmbier was arrested last month

471
00:28:08,440 --> 00:28:11,560
Speaker 1: after removing a political slogan sign in the hotel where

472
00:28:11,600 --> 00:28:14,720
Speaker 1: he was staying in the Young Yang. Warmber apologized to

473
00:28:14,760 --> 00:28:18,439
Speaker 1: the North Korean people, I committed my crime of taking

474
00:28:18,480 --> 00:28:22,560
Speaker 1: out the important political slogan from the staff only area

475
00:28:22,960 --> 00:28:27,480
Speaker 1: of the Angato International Hotel, aimed at carming the work

476
00:28:27,560 --> 00:28:32,200
Speaker 1: ethic and the motivation of the Korean people. North Korea

477
00:28:32,359 --> 00:28:36,520
Speaker 1: has been suspected of covercing statements from foreign detainees. A

478
00:28:36,600 --> 00:28:40,200
Speaker 1: ceasefire in Syria largely held for a second day. Russia

479
00:28:40,240 --> 00:28:43,959
Speaker 1: and Saudi Arabia reported limited violations while their strikes continued

480
00:28:44,000 --> 00:28:47,360
Speaker 1: against his Lamic State militants not covered by the Partial Troops.

481
00:28:47,880 --> 00:28:50,800
Speaker 1: Global News twenty four hours a day, powered by our

482
00:28:51,720 --> 00:28:54,239
Speaker 1: journalists and more than a hundred fifty news bureaus from

483
00:28:54,280 --> 00:28:58,520
Speaker 1: around the world. I'm Michael Barr, Night, Tom, Thank you, Michael.

484
00:28:58,560 --> 00:29:01,320
Speaker 1: Time now for the Bloomberg NBCA. The sports update here

485
00:29:01,480 --> 00:29:03,920
Speaker 1: is John Stash All right, Mike, hard to Wayne when

486
00:29:03,920 --> 00:29:06,720
Speaker 1: you can't make shots, take away the Nick Center, Robin Lopez.

487
00:29:06,800 --> 00:29:09,120
Speaker 1: Last night, the other four starters combined to shoot under

488
00:29:09,240 --> 00:29:12,200
Speaker 1: twenty five percent at the Guard in Miami led all

489
00:29:12,240 --> 00:29:16,440
Speaker 1: the way in one Knicks have lost fourteen the last seventeen.

490
00:29:16,480 --> 00:29:19,320
Speaker 1: That heat just added Joe Johnson after his release last

491
00:29:19,360 --> 00:29:22,480
Speaker 1: week by Brooklyn. He scored twelve points his Miami debut.

492
00:29:22,640 --> 00:29:25,320
Speaker 1: NHL trade deadline three o'clock today, Rangers made a move,

493
00:29:25,640 --> 00:29:28,400
Speaker 1: sending the prospect to draft picks to Carolina for veteran

494
00:29:28,520 --> 00:29:31,160
Speaker 1: Eric Staal, who waves as no trade clause, gets to

495
00:29:31,200 --> 00:29:33,200
Speaker 1: play with his brother Mark. He'll be a free agent

496
00:29:33,240 --> 00:29:35,400
Speaker 1: after the season. He figures to play tonight at the

497
00:29:35,400 --> 00:29:38,600
Speaker 1: Garden against Columbus. Edmonton had lost seven a row, suddenly

498
00:29:38,640 --> 00:29:41,320
Speaker 1: scored three third period goals into the Islanders three game

499
00:29:41,320 --> 00:29:43,560
Speaker 1: win Street three to one. N C Double A tournament

500
00:29:43,600 --> 00:29:45,680
Speaker 1: in two weeks. Seaton Hall is almost certainly gonna make

501
00:29:45,720 --> 00:29:48,680
Speaker 1: it first time in a decade, Doesni Rodriguez twenty seven

502
00:29:48,720 --> 00:29:51,960
Speaker 1: points in one win over Xavier, who came in ranked

503
00:29:51,960 --> 00:29:54,360
Speaker 1: fifth in the country, had just beaten top rank Villanova.

504
00:29:54,720 --> 00:29:57,920
Speaker 1: As for St. John's, coach Chris Mullen ejected and he

505
00:29:58,040 --> 00:30:01,160
Speaker 1: one hundred to fifty nine lost Creighton. St. John's only

506
00:30:01,240 --> 00:30:03,960
Speaker 1: once before lost the game by as much as forty one,

507
00:30:04,280 --> 00:30:07,440
Speaker 1: and that was in nineteen one. One of the air

508
00:30:07,520 --> 00:30:09,680
Speaker 1: for Monmouth. I only know one as well, staying a

509
00:30:09,720 --> 00:30:12,640
Speaker 1: game behind in the Macware Manhattan lost it. Writer Adam

510
00:30:12,720 --> 00:30:15,640
Speaker 1: Scott once shot victory at the Honda Classic. Well at

511
00:30:15,640 --> 00:30:19,520
Speaker 1: the Bloomberg NBC Sports Update. I'm John Staphell, John, I

512
00:30:19,640 --> 00:30:23,840
Speaker 1: thank you so much, greatly, appreciate it again. Uh, Michael

513
00:30:23,880 --> 00:30:27,560
Speaker 1: McKee and I onto Washington. We will speak with Sherman Greenspan.

514
00:30:27,640 --> 00:30:30,640
Speaker 1: Have that for you tomorrow. Jason Furman schedule to join

515
00:30:30,720 --> 00:30:32,920
Speaker 1: us on Bloomberg Television as well. Chairman of the President's

516
00:30:32,920 --> 00:30:37,000
Speaker 1: Council of Economic Advisors, will have other select Super Tuesday guests.

517
00:30:37,040 --> 00:30:39,320
Speaker 1: Trying to Mike, I think, what's our goal, Mike, after

518
00:30:39,400 --> 00:30:43,920
Speaker 1: the the absolute uniqueness of the weekend news? Slow, do

519
00:30:44,000 --> 00:30:47,600
Speaker 1: you have a goal in mind as we attack Super Tuesday? Well,

520
00:30:47,680 --> 00:30:50,320
Speaker 1: I think we want to talk about what the economic

521
00:30:50,400 --> 00:30:52,520
Speaker 1: impact of any of this. Maybe we've been talking with

522
00:30:52,680 --> 00:30:54,760
Speaker 1: Eric Weisman about the kind of things that need to

523
00:30:54,800 --> 00:30:58,920
Speaker 1: be done, and yeah, let's look at it. Anybody would

524
00:30:58,960 --> 00:31:02,040
Speaker 1: do them. My goal is the political mechanism, not the

525
00:31:02,160 --> 00:31:04,280
Speaker 1: horse race. You can get that a lot of places,

526
00:31:04,320 --> 00:31:07,520
Speaker 1: including the wonderful work of Mark Helper and and John Heilman,

527
00:31:07,600 --> 00:31:09,960
Speaker 1: with all due respect. Not the horse race, but just

528
00:31:10,400 --> 00:31:13,560
Speaker 1: where do we go from here? That appears to be

529
00:31:13,640 --> 00:31:21,480
Speaker 1: a mystery in Washington tomorrow. Bloomberg Surveillance. Bloomberg Surveillance brought

530
00:31:21,520 --> 00:31:23,240
Speaker 1: to by a Flushing Bank. Up on a complete business

531
00:31:23,320 --> 00:31:25,200
Speaker 1: checking account with fifteen thousand dollars and more and get

532
00:31:25,240 --> 00:31:28,120
Speaker 1: a free sixteen gig WiFi tablet. Visit Flushing bank dot

533
00:31:28,160 --> 00:31:30,120
Speaker 1: com for details. Re member f d I C Equal

534
00:31:30,160 --> 00:31:40,120
Speaker 1: Housing Lindon keeping global business news twenty four hours a

535
00:31:40,240 --> 00:31:43,480
Speaker 1: day at Bloomberg dot com, the Radio plus mobile lapp

536
00:31:43,560 --> 00:31:46,960
Speaker 1: and on your radio. This is a Bloomberg Business Flash

537
00:31:47,640 --> 00:31:50,000
Speaker 1: and I'm Karin Moscow. This updates brought to you by

538
00:31:50,160 --> 00:31:53,560
Speaker 1: cbo E Vicks Options in Futures. Volatility can be harnessed

539
00:31:53,600 --> 00:31:56,720
Speaker 1: with cbo E Vicks Options in Futures. See disclosures and

540
00:31:56,800 --> 00:32:00,440
Speaker 1: learn more at cbo e dot com. Slash Powerful comes

541
00:32:00,680 --> 00:32:04,000
Speaker 1: vix U s Dock Index futures are extending their gains

542
00:32:04,080 --> 00:32:07,720
Speaker 1: after reversing earlier losses. Mrs Jonah's Central Bank stepped up

543
00:32:07,760 --> 00:32:10,680
Speaker 1: efforts to cushion the country's economic slowdown to check the

544
00:32:10,720 --> 00:32:13,720
Speaker 1: markets every fifteen minutes throughout the trading day. All Bloomberg

545
00:32:14,120 --> 00:32:16,800
Speaker 1: SNP E Many futures up three points, now down, EMNY

546
00:32:16,880 --> 00:32:20,240
Speaker 1: futures up fourteen has that euny futures. They're little change

547
00:32:20,320 --> 00:32:23,400
Speaker 1: the decks in Germany's down seven tenths per cent tenure

548
00:32:23,440 --> 00:32:25,960
Speaker 1: treasury of two thirty seconds the yield one point seven

549
00:32:26,040 --> 00:32:29,240
Speaker 1: five percent yield them the two year point eight zero percent.

550
00:32:29,680 --> 00:32:32,200
Speaker 1: NIMEX screwed oil up one point two percent, or thirty

551
00:32:32,280 --> 00:32:35,320
Speaker 1: nine cents. The thirty three seventeen A barrel comes gold

552
00:32:35,400 --> 00:32:37,640
Speaker 1: up seven tenths per cent or eight dollars ninety cents.

553
00:32:37,680 --> 00:32:41,000
Speaker 1: At twelve thirty announced the euro a dollar oh eight

554
00:32:41,080 --> 00:32:44,360
Speaker 1: eight to the N one thirteen point one five. Lumber

555
00:32:44,400 --> 00:32:47,840
Speaker 1: liquidators posting fourth quarter sales that trailed analysts estimates as

556
00:32:47,840 --> 00:32:51,720
Speaker 1: allegations that is sold flooring with unhealthy levels of Formaldehat

557
00:32:52,040 --> 00:32:55,360
Speaker 1: continued to ward off customers, and Energy Energy, the worst

558
00:32:55,360 --> 00:32:58,520
Speaker 1: performing member of the SMP five hundred utility index so

559
00:32:58,640 --> 00:33:01,480
Speaker 1: far this year, report it adjusted profit in the fourth

560
00:33:01,560 --> 00:33:05,480
Speaker 1: quarter that beat analysts forecast. So that's a Bloomberg business flash.

561
00:33:05,520 --> 00:33:08,760
Speaker 1: Tom and Mike Karen, thank you so much. Features up

562
00:33:08,840 --> 00:33:13,120
Speaker 1: three again. Fractional move there this morning. It is on

563
00:33:13,240 --> 00:33:17,560
Speaker 1: Wall Street. The following is from Bloomberg View. Opinions and

564
00:33:17,640 --> 00:33:21,320
Speaker 1: commentary from Bloomberg columnists. I'm Paula Dwyer, an editor with

565
00:33:21,400 --> 00:33:25,040
Speaker 1: Bloomberg View. For a candidate who promises to make America

566
00:33:25,120 --> 00:33:27,920
Speaker 1: great again, Donald Trump has a funny way of showing it.

567
00:33:28,240 --> 00:33:31,800
Speaker 1: He has called for consumer boycotts of products sold by

568
00:33:31,880 --> 00:33:36,440
Speaker 1: numerous companies, including Apple, Macy's, and Nibisco. He has denigraded

569
00:33:36,520 --> 00:33:39,800
Speaker 1: United Technologies and Ford Motor for making air conditioners and

570
00:33:39,920 --> 00:33:43,200
Speaker 1: car parts in Mexico. He even wants Americans to boycott

571
00:33:43,320 --> 00:33:46,560
Speaker 1: the entire country of Mexico. Indeed, Trump seems to be

572
00:33:46,640 --> 00:33:49,560
Speaker 1: doing his level best to hurt American business. A Trump

573
00:33:49,640 --> 00:33:52,360
Speaker 1: tirade may have a minimal effect on a company's earnings

574
00:33:52,400 --> 00:33:55,320
Speaker 1: and jobs, but if he wins the presidency, he could

575
00:33:55,400 --> 00:33:58,880
Speaker 1: cause real economic harm. Apple is just the latest target.

576
00:33:59,040 --> 00:34:02,400
Speaker 1: He wants consumers to retaliate against the company for refusing

577
00:34:02,440 --> 00:34:05,560
Speaker 1: to unlock the iPhone of the San Bernardino terrorists. He

578
00:34:05,680 --> 00:34:08,319
Speaker 1: also urged a boycott of Starbucks for choosing a plain

579
00:34:08,400 --> 00:34:12,080
Speaker 1: red design for its holiday season cups and not traditional

580
00:34:12,160 --> 00:34:15,479
Speaker 1: scenes like Christmas trees. He even took offense when Macy

581
00:34:15,560 --> 00:34:19,040
Speaker 1: stopped selling his clothing line because he called Mexican immigrants

582
00:34:19,160 --> 00:34:22,560
Speaker 1: rapists and drug dealers. Trump's antagonists know how to play

583
00:34:22,600 --> 00:34:25,239
Speaker 1: the game, too. They're calling for boycotts of all things

584
00:34:25,360 --> 00:34:29,200
Speaker 1: branded Trump. There's even a Facebook page listing the golf courses,

585
00:34:29,320 --> 00:34:33,479
Speaker 1: office buildings and casinos to avoid and politics turn about

586
00:34:33,520 --> 00:34:36,919
Speaker 1: his fair play. I'm Paula Dwyer and editor with Bloomberg View.

587
00:34:37,320 --> 00:34:40,080
Speaker 1: For more commentary and opinion, please go to bloomberg View

588
00:34:40,160 --> 00:34:43,759
Speaker 1: dot com. This has been Bloomberg View and Bloomberg View

589
00:34:43,880 --> 00:34:47,960
Speaker 1: commentaries come here to hourly weekdays. I'm Bloomberg Radio, Mike.

590
00:34:48,040 --> 00:34:50,399
Speaker 1: I've been remiss. I have not mentioned German to your

591
00:34:50,560 --> 00:34:54,040
Speaker 1: ugly morning. A little bit of a rebound, a lesser

592
00:34:54,719 --> 00:34:57,680
Speaker 1: negative yield negative point five seven to three decimal points.

593
00:34:58,080 --> 00:35:01,520
Speaker 1: I'm struggling here. Negative point five six to the tenure

594
00:35:01,600 --> 00:35:05,320
Speaker 1: had a ten handle on a point one zero higher

595
00:35:05,440 --> 00:35:09,319
Speaker 1: yield point one one nine is still jaw dropping. Well.

596
00:35:09,480 --> 00:35:12,120
Speaker 1: A lot of reaction in Europe to the lower than

597
00:35:12,280 --> 00:35:17,080
Speaker 1: forecast inflation numbers. In the United States, in contrast, we've

598
00:35:17,160 --> 00:35:20,359
Speaker 1: had higher than forecast inflation numbers, which is why it's

599
00:35:20,360 --> 00:35:22,640
Speaker 1: a good thing to be talking with Eric Weissman, because

600
00:35:23,160 --> 00:35:27,520
Speaker 1: he is a investment officer portfolio manager at MFS Investment Management,

601
00:35:27,600 --> 00:35:32,360
Speaker 1: in charge of the firm's inflation adjusted bond, strategic income

602
00:35:32,480 --> 00:35:37,880
Speaker 1: and global bond portfolios. UM. At this point, let's separate

603
00:35:37,920 --> 00:35:39,759
Speaker 1: the two out and and talk about inflation in the

604
00:35:39,840 --> 00:35:45,280
Speaker 1: United States. Eric, are you seeing anybody interested in inflation

605
00:35:45,400 --> 00:35:47,560
Speaker 1: link bonds at this point? Given the numbers we got

606
00:35:47,640 --> 00:35:50,239
Speaker 1: last week from the CPI and the pc well, you

607
00:35:50,360 --> 00:35:52,520
Speaker 1: are seeing some interest there now if you look at

608
00:35:52,640 --> 00:35:55,759
Speaker 1: ten year inflation break evens, that's the difference between the

609
00:35:55,880 --> 00:35:58,440
Speaker 1: nominal bond and the real yield from a TIPS bond

610
00:35:58,920 --> 00:36:01,320
Speaker 1: that had bottomed out around a hundred and twenty basis

611
00:36:01,400 --> 00:36:04,399
Speaker 1: points and in the last handful of trading days has

612
00:36:04,480 --> 00:36:07,800
Speaker 1: begun to rebound, and where above a hundred forty and

613
00:36:07,960 --> 00:36:10,439
Speaker 1: a reasonable place to be would seem to be quite

614
00:36:10,480 --> 00:36:13,800
Speaker 1: a bit higher before all the madness of this global

615
00:36:13,880 --> 00:36:17,600
Speaker 1: financial crisis in its aftermath, to fifty would have been

616
00:36:17,719 --> 00:36:21,360
Speaker 1: a reasonable place to be in tenure tips break evens,

617
00:36:21,840 --> 00:36:25,000
Speaker 1: and more recently maybe one eighty was a reasonable place.

618
00:36:25,080 --> 00:36:31,080
Speaker 1: So one forty still looks pretty cheap. Well, do you

619
00:36:31,160 --> 00:36:33,400
Speaker 1: think this continues or is this just a balance based

620
00:36:33,440 --> 00:36:37,160
Speaker 1: on the numbers? Are people really getting concerned about inflation

621
00:36:37,239 --> 00:36:38,960
Speaker 1: in the US and whether or not the FED is

622
00:36:39,200 --> 00:36:43,040
Speaker 1: behind the curve? I don't think they're getting concerned as

623
00:36:43,120 --> 00:36:46,040
Speaker 1: much as looking at that level and saying it's too

624
00:36:46,120 --> 00:36:50,200
Speaker 1: low that inflation break evens, Looking at that relationship between

625
00:36:50,320 --> 00:36:53,359
Speaker 1: tips bonds and nominal bonds, it's just too low. That's

626
00:36:53,360 --> 00:36:57,640
Speaker 1: sort of a panic level. That's looking at priced for

627
00:36:58,120 --> 00:37:02,160
Speaker 1: negative perfection. Every thing going pear shaped, and it doesn't

628
00:37:02,160 --> 00:37:04,200
Speaker 1: look like that's where we are. The macro looks a

629
00:37:04,239 --> 00:37:06,960
Speaker 1: little bit better. Recently, we got better retail sales, better

630
00:37:07,640 --> 00:37:10,680
Speaker 1: uh income, better spending, So maybe it's not quite as

631
00:37:10,719 --> 00:37:12,800
Speaker 1: bad as those numbers would indicate. If we start with

632
00:37:12,880 --> 00:37:15,640
Speaker 1: our listeners of all persuasions, their heads are spending, even

633
00:37:15,719 --> 00:37:18,000
Speaker 1: if they know the math that they pretend to understand

634
00:37:18,080 --> 00:37:22,640
Speaker 1: the Fabosi yield curve. What's your to do list for

635
00:37:22,840 --> 00:37:25,560
Speaker 1: people not yield hugs. I mean, let's assume we're not

636
00:37:25,640 --> 00:37:28,400
Speaker 1: trying to help them. They always end up crashing and burning.

637
00:37:28,440 --> 00:37:32,640
Speaker 1: But what's the MFS to do list for people that

638
00:37:32,920 --> 00:37:36,040
Speaker 1: need just it's such a quaint phrase that people that

639
00:37:36,200 --> 00:37:40,600
Speaker 1: need income. Well, it depends upon your risk tolerance. But

640
00:37:40,920 --> 00:37:43,320
Speaker 1: I tell you, we've talked about this before. If you

641
00:37:43,400 --> 00:37:46,840
Speaker 1: look at high yield spreads, they seem to be pricing

642
00:37:46,920 --> 00:37:50,480
Speaker 1: in recession, and we don't believe we're going into recession.

643
00:37:50,560 --> 00:37:52,760
Speaker 1: It's not very often that you can pick up almost

644
00:37:52,840 --> 00:37:56,759
Speaker 1: eight hundred basis points over treasuries in high yield, And

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00:37:56,920 --> 00:37:59,040
Speaker 1: even if you want something that's a little more secure

646
00:37:59,120 --> 00:38:02,880
Speaker 1: in high grade, these levels of spreads are giving you

647
00:38:03,000 --> 00:38:06,560
Speaker 1: an opportunity unless you believe that we're going into something

648
00:38:06,640 --> 00:38:09,399
Speaker 1: that looks like two thousand and eight. Again, well, could

649
00:38:09,440 --> 00:38:13,279
Speaker 1: we in certain sectors? Well, I think you still want

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00:38:13,320 --> 00:38:17,080
Speaker 1: to stay away from UH energy and materials. I think

651
00:38:17,160 --> 00:38:21,200
Speaker 1: that story continues as long as we're still looking for

652
00:38:21,360 --> 00:38:25,560
Speaker 1: a bottom in China that winds up impacting em which

653
00:38:25,640 --> 00:38:29,439
Speaker 1: winds up hitting industrial production and global trade, and those

654
00:38:29,600 --> 00:38:32,239
Speaker 1: sorts of sectors I think continue to be on on

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00:38:32,320 --> 00:38:37,600
Speaker 1: their back foot when you look at the battle over this,

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00:38:37,800 --> 00:38:40,040
Speaker 1: so much of it comes down to our audience looks

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00:38:40,080 --> 00:38:43,440
Speaker 1: at single point yield, and pros look at spread market.

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00:38:43,840 --> 00:38:47,120
Speaker 1: How would you explain to the average person that they

659
00:38:47,200 --> 00:38:49,800
Speaker 1: look at the mumbo jumbo of the two s ten spread,

660
00:38:50,280 --> 00:38:53,239
Speaker 1: the three months, two years spread, the belly of the

661
00:38:53,360 --> 00:38:56,600
Speaker 1: curve five to seven years, etcetera. What's your approach on it?

662
00:38:57,800 --> 00:38:59,160
Speaker 1: I think you want to look at all of those

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00:38:59,239 --> 00:39:01,839
Speaker 1: different points, and as you say you need to look

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00:39:01,920 --> 00:39:04,000
Speaker 1: at in a spread basis, you need to look at

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00:39:04,040 --> 00:39:06,960
Speaker 1: it on an absolute basis. And one of the themes

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00:39:07,040 --> 00:39:10,400
Speaker 1: that we like to talk about is when does nominal

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00:39:10,840 --> 00:39:15,400
Speaker 1: matter and when does real matter? And and in this

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00:39:15,600 --> 00:39:18,160
Speaker 1: environment you can get really bogged down in the fact

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00:39:18,280 --> 00:39:22,680
Speaker 1: that yields are so low and in places negative on

670
00:39:22,760 --> 00:39:26,640
Speaker 1: a nominal basis, don't lose sight of what's going on

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00:39:27,239 --> 00:39:30,120
Speaker 1: in real terms. And just as a very quick example,

672
00:39:30,680 --> 00:39:34,440
Speaker 1: you should be indifferent between getting a one percent yield

673
00:39:34,800 --> 00:39:38,080
Speaker 1: in a three percent inflation environment and a negative one

674
00:39:38,160 --> 00:39:42,160
Speaker 1: percent yield in a one percent inflation environment. But we're

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00:39:42,200 --> 00:39:45,439
Speaker 1: not because when we see those negative yields, we're sort

676
00:39:45,480 --> 00:39:48,680
Speaker 1: of appalled. But don't lose track that those are both

677
00:39:49,400 --> 00:39:55,560
Speaker 1: negative two percent returns. So you should be indifferent. Erman,

678
00:39:55,600 --> 00:39:58,680
Speaker 1: thank you so much, greatly appreciate it. With nfs that

679
00:39:58,719 --> 00:40:01,520
Speaker 1: walks through the bond market. Uh. This morning, I I

680
00:40:01,560 --> 00:40:05,840
Speaker 1: I asked the Bill gross question there, um, Mike, the

681
00:40:05,960 --> 00:40:10,160
Speaker 1: idea of financial repression. Yes, and boy, my anecdotal this

682
00:40:10,320 --> 00:40:15,480
Speaker 1: weekend is is there's just a certain desperation among a

683
00:40:15,600 --> 00:40:18,160
Speaker 1: certain part of the public. Well, there are people. The

684
00:40:19,040 --> 00:40:22,640
Speaker 1: argument is being made now that we've gone beyond what

685
00:40:22,880 --> 00:40:27,440
Speaker 1: benefit you can get from additional FED easing to the

686
00:40:27,480 --> 00:40:30,759
Speaker 1: point where the you're you're actually hurting yourself because of

687
00:40:30,800 --> 00:40:33,680
Speaker 1: the financial repression of people can't make any money on

688
00:40:34,040 --> 00:40:37,120
Speaker 1: their savings. I mean, I mean there it is, what

689
00:40:37,160 --> 00:40:41,080
Speaker 1: are you gonna listen for tomorrow in Washington, well away

690
00:40:41,120 --> 00:40:45,360
Speaker 1: from Chairman Greenspan and Jason Furman. Oh, you cheated, because

691
00:40:45,440 --> 00:40:48,279
Speaker 1: I wanted to mention place and the idea that we

692
00:40:48,400 --> 00:40:51,279
Speaker 1: can ask him about negative rates and certainly as a

693
00:40:51,360 --> 00:40:56,160
Speaker 1: scholar of what works and what doesn't. But we're also

694
00:40:56,200 --> 00:40:59,120
Speaker 1: gonna be talking with some political pros um. You know,

695
00:40:59,280 --> 00:41:03,879
Speaker 1: the the whole business of campaigning has gone high tech,

696
00:41:04,640 --> 00:41:07,480
Speaker 1: and we've got some people coming in who will explain

697
00:41:07,600 --> 00:41:10,759
Speaker 1: to us how that works. We hope that we're your

698
00:41:11,000 --> 00:41:16,359
Speaker 1: location tomorrow, folks, for non hysteria. I Mike, I saw

699
00:41:17,360 --> 00:41:23,240
Speaker 1: breathless maybe hysterias or wrong word, breathless entertainment this weekend.

700
00:41:24,040 --> 00:41:26,600
Speaker 1: We we we've turned all of and I'm as guilty

701
00:41:26,640 --> 00:41:29,319
Speaker 1: of as John Tucker has told me three or four times.

702
00:41:29,719 --> 00:41:34,360
Speaker 1: I'm guilty of it. We've turned it into an entertainment event.

703
00:41:35,840 --> 00:41:38,279
Speaker 1: It's not Unfortunately the press has done that, at least

704
00:41:38,360 --> 00:41:41,680
Speaker 1: on the Republican side, because they're so fascinated with the

705
00:41:42,160 --> 00:41:44,839
Speaker 1: he said, she said, well, he said, he said, since

706
00:41:44,840 --> 00:41:47,240
Speaker 1: there's no women left on the Republican side for President

707
00:41:47,640 --> 00:41:52,440
Speaker 1: Um rather than what they're saying about their academic policies.

708
00:41:52,880 --> 00:41:55,359
Speaker 1: And I think it wasn't much different on the other

709
00:41:55,480 --> 00:41:59,120
Speaker 1: side until Secretary Clinton did better than good in South Carolina.

710
00:41:59,200 --> 00:42:01,960
Speaker 1: O can I yeah, I do. Shameless plug here Froloomberg Intelligence,

711
00:42:02,040 --> 00:42:06,759
Speaker 1: our pallist unit. They have a whole series of economic

712
00:42:06,840 --> 00:42:10,960
Speaker 1: analyzes out this morning of the various candidates, particularly of

713
00:42:11,360 --> 00:42:14,360
Speaker 1: Mr Trump, the front runners UH proposals and what they

714
00:42:14,400 --> 00:42:17,320
Speaker 1: would mean for the economy and companies. And if you

715
00:42:17,520 --> 00:42:20,400
Speaker 1: are a subscriber to the Bloomberg Professional Service, which of

716
00:42:20,480 --> 00:42:22,439
Speaker 1: course you want to be, you want to look close

717
00:42:22,560 --> 00:42:26,640
Speaker 1: up look ay, very good there. It is a sell

718
00:42:26,719 --> 00:42:30,080
Speaker 1: on Bloomberg Intelligence as well. Michael McKain, Tom keenan New

719
00:42:30,160 --> 00:42:33,040
Speaker 1: York today, Good morning, Bloomberg eleven three, Oh, Bloomberg twelve

720
00:42:33,280 --> 00:42:38,360
Speaker 1: d Boston, really celebrating the true celebration of a Boston

721
00:42:38,440 --> 00:42:41,799
Speaker 1: globe from another time and place to go. Good good

722
00:42:41,840 --> 00:42:45,040
Speaker 1: morning to Mr Baron down at the Washington Post, who

723
00:42:45,760 --> 00:42:48,920
Speaker 1: was part of that spotlight effort. It's Bloomberg's Evanas