Speaker 1: This is Bloomberg surveillance and the markets in particular, there's
Speaker 1: gone a belief that there's no way Trump could become president.
Speaker 1: I continue to argue if there is a plausible tath,
Speaker 1: this divergent monetary policy world that we live in is
Speaker 1: not necessarily supportive of the US equity markets. This is
Speaker 1: Quewei three on its way to Kuwei fourteen. Whether we
Speaker 1: like it or not, that's the reality. And there's traders.
Speaker 1: That's how we have to deal Bloomberg surveillance. Your link
Speaker 1: to the world of economics, finance and investment on Bloomberg Radio.
Speaker 1: Good running everyone, Michael McKay and Tom Kane worldwide. This
Speaker 1: morning brought you by Cone Resident Accounting, tax advisory. Regulatory
Speaker 1: changes can impact your business. See how the experts at
Speaker 1: Cone Resident can help you navigate these complexities. Find out
Speaker 1: more at Cone residuc dot com, Bank of England out
Speaker 1: in our Central Bank, Derby with Indonesia, Norway earlier today
Speaker 1: Carolina in New York with US. What do you see?
Speaker 1: And it's like the Swiss we're holding study we have
Speaker 1: for already seven years. We're at this record low nor
Speaker 1: point five per cent is where we keep the key
Speaker 1: rate tom nine to zero. Still not one dissenter again
Speaker 1: at the b o E not wanting to see rate
Speaker 1: hikes anytime soon. We have asset purchases planning still to
Speaker 1: hold billion pounds, but overall they're saying increased uncertain He's
Speaker 1: surrounding the Brexit vote. This is what is putting off
Speaker 1: any sort of interest rate hike. The pound remaining higher
Speaker 1: against the dollar, up seven tenths of percent, and of
Speaker 1: course boring costs still coming down on those on the
Speaker 1: debt market was saying yields down about nine basis. That
Speaker 1: was a real conundrum for Mark Kearney with Brexit coming up.
Speaker 1: He doesn't want to contribute to the debate at all
Speaker 1: and he was almost forced to, wasn't. He had to
Speaker 1: come up in front of the Treasury Select Committee just
Speaker 1: last week and we have to state what he felt
Speaker 1: about a Brexit. He of course was outlining that the
Speaker 1: Bank of England didn't want to make up a call
Speaker 1: pro or against, but did say that there were going
Speaker 1: to be concerns. True with a lifter. You've got the
Speaker 1: chart up there, we'll put a Bloomberg radio plus we're
Speaker 1: sometimes of percent. We're at one dollar to ever go
Speaker 1: out for a beverage of your choice in London. But
Speaker 1: when you do, do people talk about Brexit? Or is
Speaker 1: it just the province of newspapers in Bloomberg when I
Speaker 1: have a tiple of my fancy, Yes, it is being
Speaker 1: talked about. It's all consuming tom at the moment. Everyone
Speaker 1: is debating really whether it is good the small business
Speaker 1: side of the equation. They are feeling, of course, if
Speaker 1: you're not an exporter, they do seem to want to
Speaker 1: potentially be pulling out of the EU. Large corporations are
Speaker 1: standing firm that they really do feel that we need
Speaker 1: to remain part of the European Union overall. And I
Speaker 1: thank you so much sterling extendions gains today and Yann,
Speaker 1: we're watching carefully with a huge move one ten sixty eight.
Speaker 1: If someone has synthesized all that we see, or Stephen Ratner,
Speaker 1: he is a most interesting person with some some legitimate work,
Speaker 1: not only in financial investment but in journalism is well.
Speaker 1: We should I think point out as a disclaimer that
Speaker 1: at times he um manages money and gives investment counsel
Speaker 1: of the principal owner of Bloomberg Radio on Michael Bloomberg,
Speaker 1: Um Steve Rattner, The cacophony of central bank announcements in
Speaker 1: the last number of weeks has become bewildering. In it
Speaker 1: all centers unreduced growth forecast. That seems to be the
Speaker 1: common feature. The good news is that the central banks
Speaker 1: have caught up to reality, and for a while they
Speaker 1: seem to be denying reality, which is that we are
Speaker 1: in a slower growth environment. The markets knew it, the
Speaker 1: economists knew it. I think individuals probably felt it in
Speaker 1: their bones, but the central banks and the Fed anyway,
Speaker 1: was in some kind of state of denial and thinking
Speaker 1: it was still going to have four interest rate hikes
Speaker 1: this year, or thinking at least that that was a
Speaker 1: good idea. And so yesterday's announcement and the one today
Speaker 1: are welcome because we we are in that kind of
Speaker 1: an environment. And I think the far better of the
Speaker 1: argument is for the central banks to stay their course
Speaker 1: on providing monetary support in this very weak time. Does
Speaker 1: it build, does it help growth, or is it just
Speaker 1: putting a floor under it? I'm not sure I know
Speaker 1: the difference in the sense is all. What I do
Speaker 1: know is that had they gone ahead with their interest
Speaker 1: rate increases, it Look, you can make the argument a
Speaker 1: quarter point here at quarter point there, it doesn't really matter.
Speaker 1: But if in general they were going down the tightening path,
Speaker 1: then that would, if you believe anything about economic theory,
Speaker 1: make growth lower than whatever otherwise would have been. Is
Speaker 1: it huge? Is it is it immediate? Is it visible?
Speaker 1: Probably not all those questions, but it would have been
Speaker 1: move in the wrong direction. How do you link this
Speaker 1: into investment? If we assume we've migrated from January two
Speaker 1: thousand nine double digit enthusiasm off the bottom moments to
Speaker 1: a single digit world, do you ratchet down even lower
Speaker 1: expected return on form of blended portfolio? Well, again, we
Speaker 1: we and I say the markets, but certainly the case
Speaker 1: of the investment firm that I run, we have had
Speaker 1: a cautious view on growth for some time now, and
Speaker 1: in fact, you could almost take the announcements yesterday and
Speaker 1: today the other way to say kind of a bit
Speaker 1: of relief that the central banks are gonna sort of
Speaker 1: growth rather than rather than trying to hinder it. Well,
Speaker 1: we were just talking with Stephen Freeman from BNP parrybo
Speaker 1: who's the net effect of what we're seeing from the
Speaker 1: central banks is to continue the effort to push investors
Speaker 1: out the risk curve, out farther in a reach for yield.
Speaker 1: You're suggesting that may not be a good idea, or
Speaker 1: at least from your perspective, you don't want to do that. No,
Speaker 1: I think. I think we're in the business of taking risks,
Speaker 1: so we understand risk, we try to be we try
Speaker 1: to be prudent risk. But yes, I agree with that
Speaker 1: analysis that the whether it's the absolute conscious intention or
Speaker 1: or simply a consequent on so what the central banks
Speaker 1: are doing, it is going to put investors further out
Speaker 1: on the risk curve, particularly in Europe where they have
Speaker 1: where they have massively tightened spreads on investor rate corporate
Speaker 1: bonds by signaling that they were going to start buying them.
Speaker 1: And I think that that's probably a good thing. Risk
Speaker 1: sounds like a scary word, but risk comes in many gradations,
Speaker 1: many flavors, and I think you I think part of
Speaker 1: the goal of this, and part of the whole way
Speaker 1: monitory policy operates is to get is that when you
Speaker 1: hold down rates, when you reduce rates by quie whatever
Speaker 1: it is you're doing in that direction, you're drawing capital
Speaker 1: into the markets. Uh, And that's a good thing. Mike,
Speaker 1: I just want to point out dollar yen is strong,
Speaker 1: yen three standard deviations. That really gets my attention. You
Speaker 1: You wonder how they respond to that that's now become
Speaker 1: We've gone from a move to a really significant move
Speaker 1: to a low of one uh ten. My eyes are
Speaker 1: failing mean one ten sixty seven. Well, it's definitely not
Speaker 1: good news for obonomics. UH. And you wonder, Steve though
Speaker 1: UH draws capital in the markets, but people have argued
Speaker 1: that helps the small slice of society here in the US,
Speaker 1: but it's not helping the average person. Witnessed the political
Speaker 1: campaign we're seeing and with the Fed's move yesterday, yes,
Speaker 1: it's it has some positive effects. Certainly helps emerging markets,
Speaker 1: but it isn't gonna help Japan. Isn't going to help Europe. No,
Speaker 1: no clear thinking person would argue that for the US anyway,
Speaker 1: our mix of economic policies are the right policies. The
Speaker 1: FED is acting by defaulty they're the only player on
Speaker 1: the field with UH with the ball, so to speak.
Speaker 1: Congress has completely abdicated any responsibility to try to get
Speaker 1: our economy back to a more acceptable growth level, and
Speaker 1: so in the absence of that in the absence of
Speaker 1: the president having a real authority to do anything under
Speaker 1: our constant tuition, it leaves the fat and so they are,
Speaker 1: to quote Muhammad Alarian's book, they are the only game
Speaker 1: in town at the moment, and that is also true
Speaker 1: in Europe. Have you read this book? I actually reviewed
Speaker 1: this book for the New York Times. Excuse me. I
Speaker 1: saw that I in my Sunday blur the third momost
Speaker 1: the only reason, the only way to read Rattner Mike
Speaker 1: McKee is after three mimosas. So I did that. I did.
Speaker 1: What a wonderful block. I I do recommend only reading
Speaker 1: me after the Life. There's a chapter but to the
Speaker 1: point of where we are right now, when it goes
Speaker 1: right into your investment world. That chapter he has on
Speaker 1: game theory and on T decisions is awesome. What's cher
Speaker 1: Yellin's te decision right now? Well? I would say I
Speaker 1: did like the book a lot, and I was happy
Speaker 1: to review it. I'm not sure I completely agree with
Speaker 1: Mohammed that we're at this T junction because, uh, you know,
Speaker 1: he is the creator of the word of the phrase
Speaker 1: new normal, and I don't see why we don't sort
Speaker 1: of why it isn't very plausible, if likely, that we
Speaker 1: stagger along at this two percent growth rate kind of
Speaker 1: relatively indefinitely. Um, I think, I think I had an
Speaker 1: interesting conversation with somebody about this the other day. People
Speaker 1: too many people out there think that Janet Yellin secretly
Speaker 1: knows exactly what she's going to do about interest rates,
Speaker 1: and she just isn't telling us. That's not my view,
Speaker 1: and I don't think it's the reality she liked all
Speaker 1: the rest of us. You know, the famous John Maynard
Speaker 1: Kine's lange, which he actually didn't say when the facts change,
Speaker 1: I changed my mind. What do you do she's dealing
Speaker 1: with with, you know, a constant stream of data and
Speaker 1: updating and assessing her views and happily came to the
Speaker 1: right view yesterday. That aren't necessarily working anymore. Well, Well,
Speaker 1: the FED has been consistently wrong in its economic forecasts.
Speaker 1: And I don't know whether it's simply the positive bias
Speaker 1: of being a government policy maker that makes you kind
Speaker 1: of cheering for the economy or why. But when you
Speaker 1: look at the dot all the famous dot charts, they
Speaker 1: have just been so overly optimistic for so long about
Speaker 1: this recover what are you doing with the miners and
Speaker 1: with golden particular, what do we do? What are you
Speaker 1: doing within your investment house? Yeah, we generally don't invest
Speaker 1: in gold. I don't like to invest in things that
Speaker 1: we don't understand, but we Templeton join club. Yeah, but
Speaker 1: we do have We do have a little bit of
Speaker 1: an investment in in a mining situation where we feel
Speaker 1: at the economics of mine. We're investing in a mine,
Speaker 1: not in the gold. So speaking, Steve Ratner, always interesting. Um,
Speaker 1: I give a review in New York Time this weekend.
Speaker 1: Should but thank you for plugging that one, Stephen Radnor
Speaker 1: with an important review. We'll put that on in social
Speaker 1: I'll look it up and we'll get out Mr Reratner's
Speaker 1: review of Dr l Arian's book. Rattner lifts the market
Speaker 1: futures from negative eight to negative six. I'm not check
Speaker 1: in with Michael. Are I get the latest world and
Speaker 1: national headlines? Mike time. Thank you very much. Supreme Court
Speaker 1: nominee Mary Garland plans today to meet with Senators Harry
Speaker 1: Reid and Patrick Leahy on Capitol Hill Today. Democrats hope
Speaker 1: to put pressure on Republicans who are refusing to consider
Speaker 1: any Obama nominee. After a two week Senate recessed, White
Speaker 1: House says Garland will meet with the Judiciary Committee Chairman
Speaker 1: Chuck Grassley. Russian President Vladimir Putin says Russia's military can
Speaker 1: strengthen its remaining forces in Syria literally within a few
Speaker 1: hours if necessary. Putin says, though we don't want to
Speaker 1: do it. Putin says Russia's military operations in Syria created
Speaker 1: the conditions for peace talks to help in the country's
Speaker 1: five year war. Sea World says it's ending its practice
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Speaker 1: bureaus from around the world. On michaela bar like Tom maca,
Speaker 1: thanks so much, Ran seriously, folks, so a bit of
Speaker 1: a coming to the market. In the last ten minutes
Speaker 1: again one ten a handle up to one eleven thirty four.
Speaker 1: Bank of England out. Don't forget an interview with Justin
Speaker 1: Trudeau of Canada in the next hour. Bloomberge snows update
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