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Speaker 1: This is a Bloomberg Business Flash and I'm Karen Moscow.
Speaker 1: Futures are higher this morning. Let's go to the First
Speaker 1: Word Breaking news desk for today's morning call, and here's
Speaker 1: Bill muloney. Good morning, Bill, Good morning Karen. US futures
Speaker 1: are maintaining their games. Since the last time we spoke down,
Speaker 1: Futures currently hired by eighty seven point says futures gained
Speaker 1: ten and as at futures rise by twenty three. The
Speaker 1: US ten yield at one point eight eight percent. In Europe, France, Germany,
Speaker 1: Italy and Spain are hired by at least one percent,
Speaker 1: and global bond yields and crude features are also trading
Speaker 1: higher this morning. On the US economic front, at ten o'clock,
Speaker 1: hostale inventories and a ten thirty energy inventories. After de
Speaker 1: Bellas night, Bill Ackman raised the possibility Valley may sell.
Speaker 1: It's Bausch and Lome Steak and Shapulti close at Massachusetts
Speaker 1: restaurant after workers became sick. In other news, is rail
Speaker 1: CSX SES macro economic challenges persisting through finally some of
Speaker 1: your Wall Street upgrades and downgrades, ross stores, cutting neutral
Speaker 1: Colman Sacks fire, I raised overweight over at Piper bah
Speaker 1: B built and cut a hold of Jeffreys Yelp and
Speaker 1: group On cut the cell over at Ubs, and finally
Speaker 1: CBS raised outperform over at Wells Fargo live on the
Speaker 1: first Breaking News Desk on Bill Maloney. Karen, thanks Bill
Speaker 1: and to hear live breaking news over your Bloomberg type
Speaker 1: squawk a goo on your terminal, that's s Q you
Speaker 1: a w K go when that's a Bloomberg business flash.
Speaker 1: Tom and Mike Churn, thanks so much. Bloomberg Surveillance brought
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Speaker 1: Too short a time this morning with John at writing
Speaker 1: of r d Q Economics to go back X number
Speaker 1: of years to your great phrase, where's the pudding green? Well?
Speaker 1: Just for negative, Just for those who aren't amongst Tom
Speaker 1: is referring back to two thousand four piece when the
Speaker 1: Federal Reserve was raising rates at the quarter point of meeting,
Speaker 1: and we argued that they were not getting close to
Speaker 1: uh the green, they were just starting off on the
Speaker 1: path and manage neutrality. Look, we've had one move and
Speaker 1: now we've see installed by the FED and by all
Speaker 1: logic that the FEDS laid down in data dependency, they
Speaker 1: should be raising interest rates next week, but it would
Speaker 1: be such a shock to the markets. It's not in
Speaker 1: this Fed's DNA, I think to do that. So, um,
Speaker 1: we know the pudding green's out there, but the FED
Speaker 1: is still just got out of the clubhouse and there's
Speaker 1: it hit the ball once maybe on the And I
Speaker 1: gotta give that new headline to John's next essay. Are
Speaker 1: we on the golf course? This is well? I mean,
Speaker 1: what are we going from punch bowl to putting green
Speaker 1: to golf course? Here? Um, you just don't want to
Speaker 1: be out of bounds. Uh. The economy, the is at
Speaker 1: least matching what the FED said it would do uh
Speaker 1: this year. Um, but the FED is not matching what
Speaker 1: it said it would do this year in terms of
Speaker 1: of interest rates. We've talked a lot about the markets
Speaker 1: and the economy, the markets and the FED not being
Speaker 1: on the same page and having to come together. What
Speaker 1: about the Fed in its own forecast. Well, that that's
Speaker 1: the real challenge next week. Look, any one move doesn't matter,
Speaker 1: but the Feed is laid out the path of raising
Speaker 1: rates about a quarter point per quarter UH for at
Speaker 1: least the next two years, and then a little bit
Speaker 1: more after that. UH. And we have to ask, has
Speaker 1: the Fed laid out a new rationale for running monetary
Speaker 1: policy other than looking at the labor market and looking
Speaker 1: at the inflation numbers. And you say, labor market numbers
Speaker 1: four point nine unemployment, we've averaged tunes from twenty and
Speaker 1: jobs per month over the last three months. On inflation,
Speaker 1: core inflation is now one point seven percent. It's not
Speaker 1: at the one point three percent level it was back
Speaker 1: in December. So the Fed, unless they roll out a
Speaker 1: new rational, if they don't move next week, they should
Speaker 1: on their own logic. But it seems very unlikely. They
Speaker 1: can't change the outlook too much. Except there's if you
Speaker 1: look at the speeches by stan Fisher, probably the lower
Speaker 1: the neutral rate of interest, the rest of the neutral
Speaker 1: rate of interest nudget down maybe a quarter point maybe
Speaker 1: take one move out of that. But a radical move
Speaker 1: would require a radical new form of policy something of
Speaker 1: the kind. I don't believe the argument. But the only
Speaker 1: person is really laying out that case right now as
Speaker 1: Lyle Brainerd, which is saying we can't have this great
Speaker 1: divergence between US manager policy and eat easy be in
Speaker 1: the Bank of Japan. And I disagree with that for you,
Speaker 1: because I don't think we're a small open economy. We're
Speaker 1: a large still relatively closed economy, and U s should
Speaker 1: set monetary policy based on the US needs. But there's
Speaker 1: no one else really out there in the FED who's
Speaker 1: laying out a different way of looking at monetary policy.
Speaker 1: So I can't see how they changed the dots too much. Well,
Speaker 1: what when do you think they act? And how are
Speaker 1: they gonna be at the end of the year force
Speaker 1: to act more quickly? They could do UM. I if
Speaker 1: they don't move UH next week, I think it's June.
Speaker 1: The problem with Judie is what happens on June. We
Speaker 1: have a vote, We have the Brexit votes, so you
Speaker 1: have another potential global thing for the FED to worry about. UM.
Speaker 1: The markets are saying one move a year, the Feds
Speaker 1: saying one move per quarter. UM. That is a huge divergence.
Speaker 1: And I really hope that those of you who are
Speaker 1: at the press conference next week ask press the Fed
Speaker 1: on that divergence, because it's not trivial. I want to
Speaker 1: talk to you about productivity. We spoke with Dominique Constant.
Speaker 1: He was at Cambridge as your city, Sussex. He was
Speaker 1: at St John's, and he's adamant that this time is different.
Speaker 1: It's not a nine nineties dearth of productivity before the
Speaker 1: technological progress of the Internet. There's something different now. Are
Speaker 1: are you concerned about low productivity and should it amend
Speaker 1: or adjust what Cherryellen does. I'm very concerned about low productivity.
Speaker 1: We're running the lowest productivity growth over the last five
Speaker 1: years that we've done since and that was in the
Speaker 1: depths of a of a really deep procession um and
Speaker 1: without productivity gains. The wage increases that people at the
Speaker 1: FAT and elsewhere in government want to see and workers
Speaker 1: want to see can only come at the expense of
Speaker 1: profits which would undermine the expansion, or at the expense
Speaker 1: of higher inflation. There's no free lance. You cannot higher
Speaker 1: wages and maintain profit margins and keep low inflation and
Speaker 1: have this low productivity growth. And for so long people
Speaker 1: people people talk about economy and slow growth and things
Speaker 1: a demand problem. We really have a supply side problem
Speaker 1: and we don't understand it. But stam Fisher said, it
Speaker 1: doesn't like its measurement. Tarry. You gotta come back. We
Speaker 1: need a longer time with you at some point. You're
Speaker 1: John writing for for to shorter time today with already
Speaker 1: two already Q Economics just fantastic. We're gonna look at
Speaker 1: politics next. I believe there's a horse race yesterday. This
Speaker 1: is Bloomberg's surveillance coming up there. With all due respect.
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