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Speaker 1: Broadcasting live to New York, Bloomberg even to Washington, d C.

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

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Speaker 1: to the country. See is a general one ninety and

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Speaker 1: around the globe. The Bloomberg Radio Plus happened Bloomberg dot Com.

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Speaker 1: This is Broomberk Surveillance, Good Morning eight thirty on Wall

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Speaker 1: Street and Michael McKee along with Tom Keane. Economic indicators

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Speaker 1: brought to you by Commonwealth Financial Network. When it's time

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Speaker 1: to change the conversation, talk with a broker dealer r

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Speaker 1: I A that's ready to listen all eight six six

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Speaker 1: or six two three six three eight, or visit Commonwealth

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Speaker 1: dot com to learn more and hold on to that thought.

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Speaker 1: Because our economic indicators today don't come out until ten o'clock.

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Speaker 1: We've got two of interest new home sales. They're expected

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Speaker 1: to be up two point four percent. Home sales kind

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Speaker 1: of volatile, so hard to tell whether that will actually

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Speaker 1: happen or not. And the Richmond Fed Manufacturing Index, which

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Speaker 1: is sometimes ignored but may have a big influence on thinking. Today,

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Speaker 1: it's a forecast to drop to eight from fourteen, but

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Speaker 1: several of the other regional FED indexes have been negative,

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Speaker 1: and the suggestion is if we get a bad number

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Speaker 1: from Richmond and people will worry about the I s

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Speaker 1: M number that is due out on the first of June.

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Speaker 1: And of course everybody is looking to the June data

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Speaker 1: to decide what the FED is going to do. FED

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Speaker 1: officials suggesting that if the data come in as expected,

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Speaker 1: they'll raise rates in June or maybe possibly July. David Rosenberg,

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Speaker 1: whose TV commist at Gluskin Chef, is one of the

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Speaker 1: few people out there that I have seen that is

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Speaker 1: not very concerned about what the data say, because you

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Speaker 1: don't seem to be very convinced that the FED actually

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Speaker 1: is going to move in June. Well, Uh, I think

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Speaker 1: that you have a lot of um hawks and maybe

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Speaker 1: even former doves out of centered hawkers lately talking in

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Speaker 1: that direction. You know what's interesting, Mike, is that you know,

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Speaker 1: if you take a look the FED feeders contracts, uh,

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Speaker 1: they're barely priced more than fifty fifty for the FED

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Speaker 1: to go this summer. So what's interesting in this narrative

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Speaker 1: is that the markets don't even seem convinced that the FED,

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Speaker 1: after having barked so many times throughout this cycle are

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Speaker 1: necessarily going to bite um and uh, you know they

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Speaker 1: they you know they clearlier talking as though it's going

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Speaker 1: to be a live meeting in June, if not June

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Speaker 1: and July. Um and Um. I don't think a rate

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Speaker 1: hike is necessary at the current time. But even if

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Speaker 1: they go one more time, I think that's probably going

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Speaker 1: to be it for an extended period. Yeah, the Fed

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Speaker 1: doesn't want people to have that message. It appears so, Um,

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Speaker 1: why are you so convinced? I mean, if they follow

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Speaker 1: your advice, wouldn't they have a credibility problem? Well, look,

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Speaker 1: they went into this year telling us that they were

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Speaker 1: going to hike four times. So uh now it's basically

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Speaker 1: once maybe twice. So is that a credibility problem? Um?

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Speaker 1: That they set for and it's going to be one

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Speaker 1: or two. Uh. Look, if you go back, I think,

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Speaker 1: go back a few years to what the FED was

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Speaker 1: saying the funds rate was going to be today. Just

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Speaker 1: a few years ago, you'd be talking about they would

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Speaker 1: have hiked about six or eight times. They moved once.

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Speaker 1: So there's a bed of a credibility problem. I'm not

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Speaker 1: gonna say they have a credibility problem per se. Maybe

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Speaker 1: they have a bit of a forecasting problem because every

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Speaker 1: step of the way they've been over the optimistic on growth.

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Speaker 1: Uh and um and I think that's uh, you know,

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Speaker 1: part of the picture here. Look at it. If they

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Speaker 1: set the bar for them that we need to see

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Speaker 1: improvement in the second quarter from a pole treading at

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Speaker 1: best with the revision one first quarter. Uh, then I

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Speaker 1: guests are going to raise rates, you know, I mean,

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Speaker 1: what can you say? You know, the the the the

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Speaker 1: ECB raised rates when I think back in two thousand

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Speaker 1: and eleven, you had bernanke back in that in two

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Speaker 1: thousand and eight talking about raising rates that summer. So

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Speaker 1: is it possible that they raise rates? Absolutely, it's possible.

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Speaker 1: Do I think that it's necessarily a very wise move?

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Speaker 1: I think a story to look back and say, no,

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Speaker 1: you probably didn't have to, especially when the rest of

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Speaker 1: the world is moving under direction like what what does

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Speaker 1: the FIT see with all due respect that the Reserve

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Speaker 1: Bank of Australia doesn't see as they are actually messaging

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Speaker 1: in the other direction. Uh and so um, I don't know,

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Speaker 1: we do, we don't. We don't live the financial life

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Speaker 1: in a vacuum. So the sudden towards having to raise

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Speaker 1: rates this summer. Maybe they just feel they're going to

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Speaker 1: move further off the zero. They want to stay silent

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Speaker 1: during the election period, and so maybe they move one

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Speaker 1: more time and then they see a sidelines negative rates

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Speaker 1: in our next But right now, you've got a very

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Speaker 1: nice section in your recent note on the yield curve

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Speaker 1: that the two tents spread you can look at two

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Speaker 1: thirties as well, is doing some strange and odd things.

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Speaker 1: You interpret it different than most What do you see

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Speaker 1: in a flatter yield curve? Well, I don't know if

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Speaker 1: it's a different interpretation, and so it's basically, uh, the

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Speaker 1: bond market's way of telling you what it expects growth

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Speaker 1: to be in the United States. And so the flattening

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Speaker 1: yield curve is ipso factive predicting a very sluggish economic outlook.

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Speaker 1: Is it really that much different than a stock market

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Speaker 1: that has not made a new high end over a year?

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Speaker 1: Is it consistent with the recent rolling over of the

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Speaker 1: commodity complex? Uh? No, So they're all basically telling you

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Speaker 1: that the odd man out here is the Fed. Although

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Speaker 1: the Fed could be operating on a hope and prayer,

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Speaker 1: which they've been doing for the better part of the

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Speaker 1: past six years, there were always just one quarter away

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Speaker 1: from escape velocity. But the markets are sending a different signal.

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Speaker 1: And I don't know what others are saying about the

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Speaker 1: yel curve Yelker flattening. It's telling you about dis inflation growth,

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Speaker 1: not accelerating growth. Very quickly, you're on a basis point

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Speaker 1: basis do you have a point where it begins to

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Speaker 1: signal real contraction? I mean, is it ninety basis points

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Speaker 1: or fifty basis points positive? Or do you have to

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Speaker 1: go down to zero well normally normally zero to outrite

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Speaker 1: the inversion is the head for the hills point uh

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Speaker 1: in terms of the Yelk curve. So it has to invert.

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Speaker 1: It's not like it's sort of inverts or it flattens. It.

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Speaker 1: Once it inverts um within the next six and nine months,

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Speaker 1: the party's over. Okay, let's come back. David Rosenberg with

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Speaker 1: Luskin chef, and we of course have to ask about

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Speaker 1: what we're seeing in banking in Europe. What a set

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Speaker 1: of news from UniCredit with real questions there about their

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Speaker 1: leadership and Deutsche Bank with the Moody's cut back, crying

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Speaker 1: pushing back against Deutsche Bank. H This morning jess Daily's

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Speaker 1: interview with Francie Lakoi from Barclays on the urgency of

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Speaker 1: re organization. They're all of it folding into negative rates.

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Speaker 1: Michael mckennal speak to Mr Rosenberg of glaston Chef on

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Speaker 1: the distortions of the moment. Futures advanced up twelve, doubt

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Speaker 1: futures up nine seven. It's a Rosenberg bullmarket. This our

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Speaker 1: surveillance has brought you by BMW mont Kisco is a

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Speaker 1: BMW mount Kisco dot com. Here's Michael Barr with news headlines.

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Speaker 1: Mike Tom, thank you very much. There are still more

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Speaker 1: questions about the crash of egypt Air Flight eight oh four,

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Speaker 1: but a senior Egyptian forensics officials says an initial look

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Speaker 1: at recovered body parts suggest an explosion of some kind.

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Speaker 1: It is still unknown what may have caused such a blast,

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Speaker 1: and the search continues in the Mediterranean for the debris

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Speaker 1: from the aircraft, including the black boxes. After praising the

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Speaker 1: new warmer relations between the United States and Vietnam, President

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Speaker 1: Barack Obama is using the second day of his visit

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Speaker 1: to promote greater freedom for the country's citizens. President Obama

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Speaker 1: said in a speech today, and that better human rights

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Speaker 1: would improve the communist country's economy, stability, and regional power.

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Speaker 1: The President also spoke about the US and Vietnam shared

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Speaker 1: legacies from the war in both our countries. Our veterans

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Speaker 1: and families of the falling still ache for the friends

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Speaker 1: and loved ones that they lost. India set for the

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Speaker 1: highest monsoon rainfall in twenty two years. As Lendingia looms,

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Speaker 1: it will help in the planning of rice, corn and

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Speaker 1: other crops. Global News twenty four hours a day, powered

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Speaker 1: by our twenty four hundred journalists more than a hundred

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Speaker 1: fifty news bureaus around the world. Michael Bark, Mike tom Hey,

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Speaker 1: good Michael, Time now for the land over Partipity Bloomberg.

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Speaker 1: NBC Sports Update with Jud's Desha all Right. Mike Solid

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Speaker 1: pitching three home runs led him an easy win for

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Speaker 1: the Mets seven one of Washington, David Right a three

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Speaker 1: run shot in a five run thirty and Assesspenist and

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Speaker 1: Neil Walker went back to back in the fifth Major

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Speaker 1: League leading fifteenth of the year for cesspenists and the

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Speaker 1: eleventh for Walker and bar Total Cologne with seven strong innings.

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Speaker 1: We'll see what happens to night. Matt Harvey comes in

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Speaker 1: three and six five point seven seventy r a last

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Speaker 1: week against the National's knocked out in the third in

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Speaker 1: Nam allowing nine runs. Harvey will post Steven Strasburg, who's

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Speaker 1: seven and oh winner Tonight will be in first place.

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Speaker 1: NBA Playoffs Toronto we NB Cleveland one oh five ninety nine.

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Speaker 1: The backcourt of Kyle Lowry and DeMar De rosen And

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Speaker 1: combined sixty seven points. In a bit of surprise, the

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Speaker 1: East Finals are tied at two. Tonight's Game four in

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Speaker 1: the West, Raymond Green's kicked to Steven Adams resulted in

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Speaker 1: a fine but no suspension. Oklahoma City's up to one

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Speaker 1: of Bolden State has not lost two games in a

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Speaker 1: row all year. Hockey San Jose one six three at St.

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Speaker 1: Louis for a three to league in the West. The

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Speaker 1: Sharks one win from a first ever trip to the

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Speaker 1: Stanley Cup Final. The Jets start off season workouts today.

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Speaker 1: They still don't know who their quarterback is gonna be.

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Speaker 1: Bryan Fitzpatrick, speaking of the golf out, he made it

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Speaker 1: clear he has no plans to retire, wants to be

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Speaker 1: back with the Jets. But the two sides still far apart.

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Speaker 1: On a salary with the Bloomberg NBC Sports Cup dates,

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Speaker 1: I'm John Staton. John takes so much, Michael, what do

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Speaker 1: you see? I mean housing data and housing data through

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Speaker 1: the week. It's some other data as well as is

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Speaker 1: David Rosenberg mentioned, Uh, commodities a little, say oil finally

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Speaker 1: gets a bit, but gold has down two dollars just

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Speaker 1: in the last forty minutes. People are gonna look at

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Speaker 1: the numbers on housing. They'll also look at the numbers

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Speaker 1: on capital goods orders coming up later this week, and

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Speaker 1: and then those I s m s. Yeah, those I

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Speaker 1: s M and also point out euro week or one

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Speaker 1: eleven sixty seven. Uh, not so much dollars strength which

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Speaker 1: is euro week or one oleven eight fifty three pips

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Speaker 1: sterling on a tear off the Carney comments. This morning,

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Speaker 1: we are with David Rosenberg of Gluskin Chef coming up,

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Speaker 1: Michael McKee and I will talk to Mr Rosenberg about

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Speaker 1: the most interesting thing out there, not the Montreal Canadians

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Speaker 1: in their fall, but negative interest rates. It's uh challenging,

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Speaker 1: to say the least. With David Rosenberg, this is Bloomberg

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Speaker 1: risk assessment. Learn more Eisener Emperor dot com slash cyber risk. Oh.

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Speaker 1: European banks continue to struggle. Unicredits chief executive officer may

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Speaker 1: resign as soon as today and it investor demands for

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Speaker 1: a change in management. That's according to people with knowledge

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Speaker 1: of the situation. Earlier today on the Bloomberg the first

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Speaker 1: word we spoke with Jess Daily, the CEO of Bark,

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Speaker 1: please about the environment for investment banking. The investment banking

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Speaker 1: industry everywhere is having a difficult time. Um you could

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Speaker 1: argue that almost no investment bank, be it American, a German,

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Speaker 1: or or or British is covering his cost of capital.

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Speaker 1: That's not healthy for the financial system globally. And the

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Speaker 1: odds of a ray pipe at the Federal Reserve at

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Speaker 1: its June meeting, they have risen to about twenty eight percent.

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Speaker 1: And as a result of that, we're seeing a stronger

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Speaker 1: dollar across the bar in euro right now what eleven

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Speaker 1: sixty nine, the yen at one oh nine sixty nine,

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Speaker 1: and British a pounds sterling that is higher one oh

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Speaker 1: four eleven as the brigsit folks in the years. The

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Speaker 1: two year yield in the US point nine zero percent,

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Speaker 1: the tenure yield at one point eight four percent. A

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Speaker 1: comas gold this morning, that's down one percent, twelve dollars

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Speaker 1: seventy cents an ounce at twelve thirty eight eighty and

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Speaker 1: I makes a crude that has turned higher right now

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Speaker 1: a thirty two cents of barrel in forty eight d nine.

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Speaker 1: We checked the markets for you every fifteen minutes during

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Speaker 1: the trading day right here at Bloomberg Radio. Surveillance continues

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Speaker 1: with Mike McKee and Tom King, John Tucker, Thank you

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Speaker 1: so much. It is on Wall Street. The following is

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Speaker 1: from Bloomberg View Opinions and commentary from Bloomberg columnists. I'm

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Speaker 1: Justin Fox, a columnist for Bloomberg View. In his two

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Speaker 1: thousand one autobiography, A Passion to Win, Sumner Redstone, the

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Speaker 1: controlling shareholder of CBS and Viacom, uses the word friend

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Speaker 1: sixty seven times. The late TV producer Aaron Spelling is

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Speaker 1: one of my closest friends, he writes. Former Time Warner

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Speaker 1: CEO Jerry Levine is a very close friend. Former Nickelodeon

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Speaker 1: chief Geraldine Leybourne is an extremely close friend. Then we

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Speaker 1: get to the people now battling over Redstone's legacy. Philippe Dumont,

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Speaker 1: the current CEO of Viacom, is a close friend. Redstone's

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Speaker 1: daughter Sherry is one of his best friends. Best sounds

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Speaker 1: better than close, which would seem to give Sherry the

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Speaker 1: advantage over Dumont. Things are never quite that simple with

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Speaker 1: some near Redstone, though two years ago he and Sherry

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Speaker 1: weren't even speaking, And as one learns from his book,

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Speaker 1: his friendships do come and go, he has never allowed

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Speaker 1: them to stand in the way of getting what he wants. Now,

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Speaker 1: though Redstone is ninety two, there is nothing left for

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Speaker 1: him to conquer, and his waning years have been embarrassing,

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Speaker 1: even a little tragic. Maybe it's because despite all his

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Speaker 1: talk of friendship, the guy doesn't have any real friends.

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Speaker 1: I'm justin Fox, a columnist for Bloomberg View. For more

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Speaker 1: Bloomberg opinion and commentary, please go to Bloomberg View dot

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Speaker 1: com or view go on the Bloomberg terminal. This has

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Speaker 1: been Bloomberg View and Bloomberg View Commentary could be heard

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Speaker 1: hourly weekdays. I'm Bloomberg Radio. David Rosenberg with us with

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Speaker 1: Gluskin Chef. There's forty two things to talk about, David,

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Speaker 1: I would suggest in this morning of Unicrona, Deutsche Bank,

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Speaker 1: Barclays and other challenges, that we can talk about the

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Speaker 1: transmission mechanisms through the system, through the money economy and

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Speaker 1: the real economy of negative interest rates. I know you've

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Speaker 1: thought a lot about this. Maybe your Canada is removed

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Speaker 1: from negative rates, but a good part of the world

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Speaker 1: isn't what a negative rates mean for the real economy. Well,

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Speaker 1: you know, when you think of negative interest rates, what

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Speaker 1: it really amounts to when you think about it, is

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Speaker 1: a attacks on banking sector reserves. And would you consider

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Speaker 1: the old average that ending attacks you'll get less of

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Speaker 1: UM and the banks are there to create credit. Uh.

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Speaker 1: You know, when you tax the banks, which is a

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Speaker 1: negative interest rate, actually does uh you get left actually

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Speaker 1: of what you want. It's it's a mystery once again

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Speaker 1: as to why anybody would think that the answer to

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Speaker 1: a de leveraging cycle would be to impose attacks on

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Speaker 1: bank reserves. So the choice of a simple for a bank,

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Speaker 1: you either choose not to pass it on and you

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Speaker 1: take it take the hit on after tax profits um.

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Speaker 1: Or you pass those taxes onto the deposits depositors by

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Speaker 1: having them accept the lower interest rate on their deposits,

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Speaker 1: which means they have less income ultimately to spend in

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Speaker 1: the real economy. Or the bank actually ends up taxing

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Speaker 1: the borrowers by churning them higher interest rates, which, by

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Speaker 1: the way, you've seen in some of these countries in

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Speaker 1: Europe and actually embarked on this road towards negative interest rates.

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Speaker 1: So um, I've never found a tax that stimulated the economy. Uh.

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Speaker 1: And here you're seeing, first and foremost a great experiment

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Speaker 1: as to how it's not working. Are any FED or

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Speaker 1: Western central bank stimulist programs actually working anymore? Well? You know,

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Speaker 1: I think that we've hit what's referred to as the

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Speaker 1: law of diminishing returns where UH, you know, we're getting

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Speaker 1: less out of it. I think that here's here's the

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Speaker 1: problem is that UM, where there has not really been

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Speaker 1: much in the way of the leveraging the cycle in

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Speaker 1: the sense of looking at that GDP ratios. And I

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Speaker 1: don't know if it's the death that's the real problem.

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Speaker 1: It's the fact that there was insufficient global growth and

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Speaker 1: so UM. I think the Terrey policy UM is very

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Speaker 1: good at influencing the business cycle. UH. Monterrey policy is

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Speaker 1: not very good at influencing structural impediments to growth. UH.

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Speaker 1: The next stage has to be fiscal policy or fiscal

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Speaker 1: policy in terms of how it interacts with Monterrey policy. UH.

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Speaker 1: The father of KIWI, of course, was Ben Bernanke, who

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Speaker 1: talked about it not once but twice when he was

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Speaker 1: governor back in UH in November two thousand and two

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Speaker 1: and then in March of out three, UH he talked

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Speaker 1: about KWI incessantly. The FED never went there for another

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Speaker 1: six years. But if you go back to the earlier

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Speaker 1: amusings by Ben Bernanke when he first joined the FED, UH,

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Speaker 1: he also talked about helicopter money, which is how he

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Speaker 1: got his Moniker helicopter Ben really nothing new. Milton Friedman

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Speaker 1: made a career out of talking about this. UM. So,

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Speaker 1: this um cycle of unacceptably slow growth that's led to

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Speaker 1: the political situation we have in the US today does

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Speaker 1: not end until we get a more radical physical approach

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Speaker 1: to the situation. And if we don't, then it's going

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Speaker 1: to be continued muddled through. And although I don't have

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Speaker 1: a recession in the forecast, UM. I think one of

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Speaker 1: the reasons why if you ask the typical Wall Street economist,

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Speaker 1: why are you at recession odds, UM, it's because there's

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Speaker 1: such a thin margin of error. Uh. We're just but

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Speaker 1: when you're running, I mean, underlying growth right now is

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Speaker 1: barely one and a percent. Uh and uh and so

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Speaker 1: I remember the days when I started this business in

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Speaker 1: the eighties and of the nineties. I mean one percent.

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Speaker 1: You start talking about these one is the recession coming, um,

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Speaker 1: And that's the best we can do today. Roughly one

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Speaker 1: on a pcent growth is really what we've averaged over

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Speaker 1: the past three quarters. Um. There's no sign in any

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Speaker 1: leading indicator telling you that's going to be accelerating. Uh.

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Speaker 1: And what it means is that you're always just one

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Speaker 1: shock away from slipping below the zero line. So it's

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Speaker 1: not so, it's more that the recession risks um stay elevated.

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Speaker 1: And so when you're wondering how could it possibly be

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Speaker 1: that with an ultra low a priori uhum cost of

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Speaker 1: equity and debt capital, how can you therefore go through

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Speaker 1: the weakest capital spending cycle of all time? Is because

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Speaker 1: the corporate sector has no visibility when it comes to

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Speaker 1: aggre demand growth. That's the fundamental problem. So, um, we're

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Speaker 1: just basically stuck in this very weak economic environment until

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Speaker 1: we get Newton's first law coming uh to fruition, which

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Speaker 1: is that the ball in motion will stay in motion

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Speaker 1: until it's now availing force. Well, what is that kind

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Speaker 1: of railing force going to be? We've expended monentary policy

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Speaker 1: to the limit. I'm not gonna say they're totally out

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Speaker 1: of bullets, um, but really the lack of the lack

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Speaker 1: of a creative fiscal response two years of unacceptably unacceptably

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Speaker 1: low growth is the real story here. Well, within that,

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Speaker 1: and to keep the physics metaphor going and the inert

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Speaker 1: the idea of inertial force going, what is a policy

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Speaker 1: prescription you would have for the central bankers and for

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Speaker 1: the leaders that that they report to. Essentially, Well, look,

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Speaker 1: I think that we have to um, Tom isolated. What

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Speaker 1: what is the what's what's the problem? What is the problem?

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Speaker 1: What is the problem that we have actually haven't resolved

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Speaker 1: is excess of global indebtedness even in the youth. I agree,

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Speaker 1: we have not clear. So here's what has to happen.

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Speaker 1: My opinion is that, um, we have to go back

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Speaker 1: to the Bernankee helicopter money where here's here's here, here's

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Speaker 1: here's where the cycle ends and we go to a

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Speaker 1: new era of inflation. Uh. And it basically is going

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Speaker 1: to mean that the Fed eyes a trillion dollar perpetual

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Speaker 1: bond from the Treasury cut the Treasury at check. Half

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Speaker 1: that money goes to a tax cut so that we

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Speaker 1: can actually a tax cut for the middle class, so

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Speaker 1: that we can actually re expand that critical part of

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Speaker 1: the economy. Another half towards reel of infrastructure spending. There

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Speaker 1: are a lot of funky things with a new deal

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Speaker 1: in nineteen thirties, but the Hoover damn, I'm not mistaken,

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Speaker 1: is still in place today. So maybe we need some

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Speaker 1: new Hoover dams. But half the money board tax scots

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Speaker 1: have the money towards infrastructure spending and we'll be into

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Speaker 1: a new cycle. It would be nice to actually talk

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Speaker 1: about inflation again. That's how we'll do it. We got

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Speaker 1: a question in from a listener, David, I've got to

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Speaker 1: ask you this, How is it watching the Stanley Cup

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Speaker 1: with four American teams? Are you as riveted as you

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Speaker 1: would be if the maple Leice of the Canadians were

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Speaker 1: I got three words, like got three words for the listener.

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Speaker 1: Three words go, raptors go if you want, David, I'll

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Speaker 1: reach over whacking. Thank you, said David. And I are

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Speaker 1: David and I are looking for an infrastructure investment to

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Speaker 1: salvage the Montreal Canadians by this fall. Mr Rosenberg is

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Speaker 1: in Toronto with Bluskin Chef, but bleeds Montreal Canadian Blue

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Speaker 1: Blanche rouge. We are coast to coast, We're around the world.

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Speaker 1: Michael McKee and Tom keane Um features up twelve another

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Speaker 1: hour of Bloomberg surveillance