1 00:00:03,200 --> 00:00:07,080 Speaker 1: This is Bloomberg Surveillance. I've been thinking the ten years 2 00:00:07,080 --> 00:00:08,719 Speaker 1: in a one and a half two and a half 3 00:00:08,840 --> 00:00:11,200 Speaker 1: trade dance, and that's where we've been, and I think 4 00:00:11,240 --> 00:00:13,040 Speaker 1: that's where we're going to say. I think there's a 5 00:00:13,119 --> 00:00:16,600 Speaker 1: growing sentiment that maybe negative rates aren't all that they 6 00:00:16,600 --> 00:00:19,480 Speaker 1: were supposed to be in terms of stimulating growth and inflation. 7 00:00:19,640 --> 00:00:23,239 Speaker 1: Of precondition for a bad market is not necessarily a session. 8 00:00:23,360 --> 00:00:26,200 Speaker 1: Their markets can occur even if the US failed to 9 00:00:26,320 --> 00:00:29,920 Speaker 1: fall to recession. Bloomberg Surveillance your link to the world 10 00:00:29,960 --> 00:00:35,280 Speaker 1: of economics, finance, and investment on Bloomberg Radio. Good morning, 11 00:00:35,440 --> 00:00:38,200 Speaker 1: Michael McKee. It is seven am on Wall Street where 12 00:00:38,280 --> 00:00:41,760 Speaker 1: risk is kind of off today. The screen read, though 13 00:00:41,800 --> 00:00:45,800 Speaker 1: not overwhelmingly so today on surveillance and debate of sort, 14 00:00:45,840 --> 00:00:48,239 Speaker 1: Gary Shilling in a moment, who sees the red as 15 00:00:48,280 --> 00:00:51,199 Speaker 1: a harbinger. David Kelly of JP Morgan Funds, who is 16 00:00:51,240 --> 00:00:55,400 Speaker 1: an optimist, And this is must listen. Bill Emlinda Gates 17 00:00:55,400 --> 00:00:58,400 Speaker 1: at eight am in their annual letter for the Gates Foundation, 18 00:00:58,600 --> 00:01:02,480 Speaker 1: a stern, stark warning Tom about the risks of climate change. 19 00:01:02,560 --> 00:01:05,840 Speaker 1: That is going to be must listen. They have actually 20 00:01:06,000 --> 00:01:08,199 Speaker 1: done it. They're one of the few that has put 21 00:01:08,280 --> 00:01:13,440 Speaker 1: money where mouth is an action, and it's a beautiful thing. 22 00:01:13,600 --> 00:01:17,000 Speaker 1: I mean, we don't understand what he has done about 23 00:01:17,000 --> 00:01:21,119 Speaker 1: the virology and microbiology of the world. He has done 24 00:01:21,120 --> 00:01:25,039 Speaker 1: two of them. Major credit for that interesting letter, this 25 00:01:25,120 --> 00:01:28,240 Speaker 1: time aimed at young people. Uh. It seems to be 26 00:01:28,280 --> 00:01:31,319 Speaker 1: the market these days. From Bernie Sanders to Bill Gates. Anyway, 27 00:01:31,360 --> 00:01:35,760 Speaker 1: Bill Gates at eight am on surveillance. Markets on this Tuesday, 28 00:01:36,000 --> 00:01:40,080 Speaker 1: as I mentioned, are lower. The stock six under by 29 00:01:40,120 --> 00:01:42,640 Speaker 1: a point, that's four tens of percent on that index. 30 00:01:42,680 --> 00:01:45,479 Speaker 1: The Docks is off by seventy eight that's your worst 31 00:01:45,480 --> 00:01:48,240 Speaker 1: performer of the day, eight tents of eight percent. The 32 00:01:48,920 --> 00:01:52,200 Speaker 1: Ifone Institute's Business Climate Index dropping to one oh five 33 00:01:52,240 --> 00:01:54,800 Speaker 1: point seven in February from one oh seven point three 34 00:01:55,280 --> 00:02:00,040 Speaker 1: lead lower by expectations. US futures are lower as in 35 00:02:00,280 --> 00:02:02,400 Speaker 1: features by two points a tenth of a percent of 36 00:02:02,440 --> 00:02:05,559 Speaker 1: tenth drop for Dow futures there down by ten points. 37 00:02:05,640 --> 00:02:08,120 Speaker 1: NASDAG features off by ten points, that's two tents on 38 00:02:08,240 --> 00:02:11,919 Speaker 1: that index. Bonds a touch weaker actually, with the tenure 39 00:02:11,960 --> 00:02:14,119 Speaker 1: yield up to one point seven eight percent to five 40 00:02:14,200 --> 00:02:17,440 Speaker 1: year at one point to five seventy six basis points 41 00:02:17,440 --> 00:02:20,320 Speaker 1: four year, two year, And of course we are watching oil. 42 00:02:20,400 --> 00:02:24,120 Speaker 1: It was lower overnight, now it is mixed. West Texas 43 00:02:24,160 --> 00:02:26,880 Speaker 1: is still off by four tents at thirty three twenty seven, 44 00:02:26,880 --> 00:02:30,040 Speaker 1: but Brent's higher by four tents at thirty four eight. 45 00:02:30,240 --> 00:02:34,760 Speaker 1: One big oil conference underway in Houston. We'll see what 46 00:02:34,840 --> 00:02:37,640 Speaker 1: news develops out of that later today. Currencies where the 47 00:02:37,680 --> 00:02:41,720 Speaker 1: action is to the extent there is action today, with 48 00:02:41,960 --> 00:02:46,400 Speaker 1: the yen lower, the euro lower, the pound lower, Dollar 49 00:02:46,480 --> 00:02:50,200 Speaker 1: Index barely higher on the day, the Australian dollar, Canada's 50 00:02:50,240 --> 00:02:54,000 Speaker 1: looney stronger against the green bag. Those are commodity currencies. 51 00:02:54,040 --> 00:02:57,600 Speaker 1: Gary Shilling says that won't last. President of a Gary 52 00:02:57,600 --> 00:02:59,600 Speaker 1: Shilling and Company back with a long list of things 53 00:02:59,600 --> 00:03:05,880 Speaker 1: wrong with global outlook, currency pairs among them. Your February newsletter, Um, 54 00:03:06,040 --> 00:03:09,080 Speaker 1: quite the lift of issues that we have to face 55 00:03:09,120 --> 00:03:12,600 Speaker 1: going forward? Well, well we do. I mean, I think 56 00:03:12,639 --> 00:03:14,600 Speaker 1: if you, if you look around the world, we've got 57 00:03:14,680 --> 00:03:19,239 Speaker 1: we've got slow growth. Um, we have virtually every country 58 00:03:19,440 --> 00:03:23,760 Speaker 1: devaluing or trying to devalue against the dollar. That they 59 00:03:23,800 --> 00:03:27,840 Speaker 1: want to have stronger economic growth, they don't have it domestically, 60 00:03:27,880 --> 00:03:29,600 Speaker 1: So they say we'll turn to exports. How do you 61 00:03:29,600 --> 00:03:31,920 Speaker 1: get more exports You make your currency cheaper, make them 62 00:03:31,960 --> 00:03:36,720 Speaker 1: more attractive to foreigners. UM. So that's going on. Commodity 63 00:03:36,800 --> 00:03:40,640 Speaker 1: prices are are declined too much supply and we're seeing 64 00:03:40,640 --> 00:03:44,640 Speaker 1: with HP buillet In cutting our dividends today a clear 65 00:03:44,640 --> 00:03:48,320 Speaker 1: indication of that, and Glenn Coral all these other commodity 66 00:03:48,360 --> 00:03:52,440 Speaker 1: producers in trouble um and uh all this does feed 67 00:03:52,480 --> 00:03:56,720 Speaker 1: into a considerable threat of deflation, which scares the daylights 68 00:03:56,760 --> 00:04:00,480 Speaker 1: out of central banks. Commodity prices have not on down 69 00:04:00,520 --> 00:04:01,840 Speaker 1: in a month and a half. As a matter of fact, 70 00:04:01,840 --> 00:04:03,960 Speaker 1: they're higher over the last month and a half UM 71 00:04:04,320 --> 00:04:08,400 Speaker 1: and oil prices have stabilized, and inflation, according to the 72 00:04:08,480 --> 00:04:13,560 Speaker 1: CPI last week is higher. So interesting thing about inflation 73 00:04:13,600 --> 00:04:15,320 Speaker 1: a matter of fact, we we've just taken a look 74 00:04:15,360 --> 00:04:19,400 Speaker 1: at that. And and one of the interesting things in 75 00:04:19,440 --> 00:04:23,479 Speaker 1: the c p I is UH of that is what's 76 00:04:23,480 --> 00:04:26,800 Speaker 1: called owner imputed rent. The assumption is that you and 77 00:04:26,839 --> 00:04:29,679 Speaker 1: I run our houses from ourselves, assuming you own your house. 78 00:04:30,440 --> 00:04:32,760 Speaker 1: That's the way it is in there. And because rests 79 00:04:32,800 --> 00:04:35,400 Speaker 1: of going up, a lot of younger people cannot afford 80 00:04:35,839 --> 00:04:39,479 Speaker 1: their own houses. Uh. And so running has been where 81 00:04:39,520 --> 00:04:43,279 Speaker 1: the action is that index is up three point two 82 00:04:43,279 --> 00:04:46,640 Speaker 1: percent versus a year ago. If you take that out, 83 00:04:47,120 --> 00:04:49,040 Speaker 1: and what matter does it? If you own your house, 84 00:04:49,080 --> 00:04:50,560 Speaker 1: you look around and say, this is what I can 85 00:04:50,600 --> 00:04:53,080 Speaker 1: run it from my from myself. For if you take 86 00:04:53,160 --> 00:04:56,360 Speaker 1: that out, it knox, the it knox the core If 87 00:04:57,240 --> 00:04:59,600 Speaker 1: if you took that out, that inflation wouldn't have fallen. 88 00:04:59,720 --> 00:05:03,120 Speaker 1: Is when home prices were going down. So that's sort 89 00:05:03,120 --> 00:05:05,760 Speaker 1: of a where would the core rate be right now? 90 00:05:05,839 --> 00:05:08,279 Speaker 1: If you take a imputer, the core rate would be 91 00:05:08,279 --> 00:05:10,640 Speaker 1: one of you're over here one point two versus one 92 00:05:11,880 --> 00:05:15,760 Speaker 1: versus one point Bloomberg Surveillance. This morning, folks, This Tuesday, 93 00:05:15,880 --> 00:05:19,440 Speaker 1: a morning brought you by Investco. Investco believes it's time 94 00:05:19,480 --> 00:05:22,640 Speaker 1: to bench the benchmarks and to consider active management and 95 00:05:22,760 --> 00:05:26,680 Speaker 1: factor based strategies. Find out more in investco dot com 96 00:05:26,760 --> 00:05:31,320 Speaker 1: Slash high Conviction. Gary, we started the morning looking at 97 00:05:31,320 --> 00:05:33,520 Speaker 1: the five year five year forward, which is a chart 98 00:05:33,880 --> 00:05:38,040 Speaker 1: very shilling friendly and just disinflation and deflation. To be clear, 99 00:05:38,680 --> 00:05:42,039 Speaker 1: can the US be in deflation or is that something 100 00:05:42,080 --> 00:05:45,400 Speaker 1: that happens abroad? Well, I think it's it's a universe, 101 00:05:45,480 --> 00:05:49,239 Speaker 1: it's a universal situation, and of course what has happened 102 00:05:49,240 --> 00:05:52,920 Speaker 1: so far as it's been largely in commands and spreading 103 00:05:53,000 --> 00:05:56,120 Speaker 1: from there. The real question, though, Tom, is will it 104 00:05:56,200 --> 00:05:59,200 Speaker 1: spread to services? If you look at if you're looking 105 00:05:59,240 --> 00:06:04,280 Speaker 1: at in the consumer US consumer, uh, goods prices are 106 00:06:04,360 --> 00:06:06,680 Speaker 1: are declining at about a three percent annual rate, but 107 00:06:06,800 --> 00:06:10,840 Speaker 1: services are still increasing about two. They are starting to 108 00:06:10,960 --> 00:06:13,880 Speaker 1: roll over and there is an effect from goods to services. 109 00:06:13,920 --> 00:06:16,919 Speaker 1: For example, people are laid off in the energy industry, 110 00:06:16,960 --> 00:06:19,520 Speaker 1: they're not going into as many bars they're they're not 111 00:06:19,880 --> 00:06:23,080 Speaker 1: they're not going to as many movies they're not they're 112 00:06:23,120 --> 00:06:25,240 Speaker 1: not getting as many haircuts if they have hair I 113 00:06:25,240 --> 00:06:30,320 Speaker 1: don't have condes spread the services. But that's the real question. Uh, 114 00:06:30,720 --> 00:06:33,400 Speaker 1: what's your probability on that? Well, I think I think 115 00:06:33,600 --> 00:06:35,800 Speaker 1: I think it probably is over fifty fifty that it 116 00:06:35,839 --> 00:06:39,000 Speaker 1: will because you simply have so much access supply in 117 00:06:39,040 --> 00:06:41,760 Speaker 1: the world, and it's only a matter of time until 118 00:06:41,800 --> 00:06:46,320 Speaker 1: people when the goods industry recently simply uh curtail, they're 119 00:06:46,400 --> 00:06:50,919 Speaker 1: they're spending on services. Services. Inflation in the most recent 120 00:06:50,960 --> 00:06:55,960 Speaker 1: CPI report was up three tenths after being up one. Yeah, 121 00:06:56,000 --> 00:06:59,400 Speaker 1: I explained that that that was that was because of 122 00:06:59,440 --> 00:07:02,280 Speaker 1: this that was because of this extraordinary increase in this 123 00:07:02,400 --> 00:07:06,479 Speaker 1: homeowner rent on a on a year over year basis, 124 00:07:06,480 --> 00:07:08,719 Speaker 1: it's unchanged two and a half percent. I mean, I'm 125 00:07:08,720 --> 00:07:12,680 Speaker 1: not sure where the rolling over is. Well, if you 126 00:07:12,760 --> 00:07:15,440 Speaker 1: if you look at if you look at I'm looking 127 00:07:15,480 --> 00:07:18,640 Speaker 1: at the I'm looking at the components of the of 128 00:07:18,880 --> 00:07:24,640 Speaker 1: not the CPI, but the the consumer consumer spending indexes. 129 00:07:24,760 --> 00:07:27,520 Speaker 1: What the FED looks at. It's not the CPI, it's 130 00:07:27,520 --> 00:07:30,040 Speaker 1: just a variation on that. But that's one that I concentrated. 131 00:07:30,160 --> 00:07:32,760 Speaker 1: We should we showed the Mike's point. We did show 132 00:07:32,800 --> 00:07:39,840 Speaker 1: the Cleveland FED measurement of inflation, which unambiguously is concave. Well, 133 00:07:39,960 --> 00:07:43,480 Speaker 1: you know he and I met with any of these things. 134 00:07:43,680 --> 00:07:45,480 Speaker 1: You can prove anything you want if you throw out 135 00:07:45,600 --> 00:07:48,120 Speaker 1: enough stuff. We do that every day. How do you know? 136 00:07:48,240 --> 00:07:52,320 Speaker 1: That's our formula and surveillance. But that's what you know. 137 00:07:52,400 --> 00:07:55,239 Speaker 1: But that's what the Cleveland Fed. And there's nothing wrong 138 00:07:55,280 --> 00:07:56,880 Speaker 1: with it. It's just a question what do you what 139 00:07:56,960 --> 00:07:59,040 Speaker 1: do you want to believe? Uh? As I say in 140 00:07:59,080 --> 00:08:01,080 Speaker 1: this case, I don't think you ought to include his 141 00:08:01,160 --> 00:08:04,640 Speaker 1: owner imputed rent because nobody really thinks about it. But 142 00:08:04,680 --> 00:08:08,840 Speaker 1: if you didn't their behavior. But they look at the 143 00:08:08,840 --> 00:08:12,000 Speaker 1: they look at the things that people buy every day. 144 00:08:12,120 --> 00:08:14,480 Speaker 1: Uh And and you know, but you can come to 145 00:08:14,520 --> 00:08:17,280 Speaker 1: almost any conclusion you want depending on where you start 146 00:08:17,360 --> 00:08:22,640 Speaker 1: on this oil prices ten dollar oil your call win. Uh. Well, 147 00:08:22,720 --> 00:08:25,320 Speaker 1: you know, one of the great forecasters historically said you 148 00:08:25,360 --> 00:08:27,640 Speaker 1: should forecast what will happen or when will happen, but 149 00:08:27,680 --> 00:08:30,400 Speaker 1: not both. I don't have a time raising on that. 150 00:08:30,520 --> 00:08:32,959 Speaker 1: But you know my rationale, Mike and I've talked about 151 00:08:32,960 --> 00:08:35,160 Speaker 1: it many times, starting literally over a year ago on 152 00:08:35,400 --> 00:08:38,960 Speaker 1: on this show. Um. The rationale is that when you're 153 00:08:38,960 --> 00:08:41,319 Speaker 1: when you're in a price war, and that's what's going on, 154 00:08:41,640 --> 00:08:44,720 Speaker 1: and OPEC is you know, Bopeck has ceased to exist 155 00:08:44,760 --> 00:08:48,440 Speaker 1: as an effective cartel. The action has shifted to American fractors. 156 00:08:48,800 --> 00:08:50,920 Speaker 1: But when you're in a situation whereas every man for 157 00:08:51,000 --> 00:08:54,560 Speaker 1: himself and everybody's trying to produce more oil, you know, 158 00:08:54,559 --> 00:08:56,800 Speaker 1: it's it's like if you have a if you have 159 00:08:56,840 --> 00:08:59,480 Speaker 1: an intersection with four gas stations, one in each corner, 160 00:09:00,040 --> 00:09:03,800 Speaker 1: somebody starts up cut prices the other the other stations 161 00:09:03,800 --> 00:09:06,439 Speaker 1: have to cut their prices in response, and it keeps 162 00:09:06,440 --> 00:09:10,960 Speaker 1: going around the around the circle that the intersection. Where 163 00:09:10,960 --> 00:09:13,600 Speaker 1: does it stop. It stops not at the price of 164 00:09:13,679 --> 00:09:16,640 Speaker 1: running the station, not the not the full cost. It 165 00:09:16,760 --> 00:09:19,880 Speaker 1: stops at the price the marginal cost, the cost of 166 00:09:20,000 --> 00:09:23,000 Speaker 1: getting the gas off a tank or the tank truck, 167 00:09:23,280 --> 00:09:26,520 Speaker 1: plus plush taxes. Well, in the case of oil, the 168 00:09:26,600 --> 00:09:29,559 Speaker 1: marginal cost is somewhere to tend to twenty bucks of 169 00:09:29,600 --> 00:09:32,839 Speaker 1: barrel and the permianm basin in Texas and even lower 170 00:09:32,880 --> 00:09:34,760 Speaker 1: in the Persian Gulf. In other words, once the holes 171 00:09:34,760 --> 00:09:38,640 Speaker 1: are drilled, once the oil is flowing, where where what 172 00:09:38,920 --> 00:09:41,240 Speaker 1: is the cost of getting to? Where does free class flow? 173 00:09:41,360 --> 00:09:45,280 Speaker 1: Just very quickly within that Newtonian analysis, does the US 174 00:09:45,400 --> 00:09:48,520 Speaker 1: drive the oil price boat? Or is it OPEC? Or 175 00:09:48,559 --> 00:09:51,240 Speaker 1: is it not OPEC? Now it's it's it's the US. 176 00:09:51,440 --> 00:09:53,520 Speaker 1: I think it's the U. S Now, it's it's not OPEC. 177 00:09:53,600 --> 00:09:57,520 Speaker 1: Opec is producing flat out. Opec has some low cost oil, 178 00:09:57,559 --> 00:10:01,280 Speaker 1: they have some high price oil. And but cartel and 179 00:10:01,320 --> 00:10:03,680 Speaker 1: I Sho had a report on that the conditions for 180 00:10:03,720 --> 00:10:06,679 Speaker 1: a cartel were wonderful. Earlier with old packet there were 181 00:10:06,720 --> 00:10:09,000 Speaker 1: only a few members. They've got a product. Well, there's 182 00:10:09,000 --> 00:10:11,959 Speaker 1: not many substancutes. Everybody wants it. Now they don't have that, 183 00:10:12,000 --> 00:10:15,160 Speaker 1: their lots of substitutes, and they no longer have control. 184 00:10:15,200 --> 00:10:17,680 Speaker 1: It's the American front. We'll come back. Gary's shilling with 185 00:10:17,760 --> 00:10:21,000 Speaker 1: us UH as we look at price change amid an 186 00:10:21,000 --> 00:10:26,280 Speaker 1: interesting mix of economics, finance and investment. Michael mckeam, Tom Keene. 187 00:10:26,280 --> 00:10:29,559 Speaker 1: We do data checks. We do them cross asset sterling 188 00:10:29,760 --> 00:10:33,079 Speaker 1: one forty nine two. It is weaker sterling today it 189 00:10:33,160 --> 00:10:35,120 Speaker 1: was a one forty handle. We have not gotten to 190 00:10:35,320 --> 00:10:39,000 Speaker 1: one th nine yet, which would be headline making dollar 191 00:10:39,120 --> 00:10:44,520 Speaker 1: elevated slightly. Looking at strong yend one twelve twelve. We 192 00:10:44,559 --> 00:10:52,319 Speaker 1: had one eleven dollar again earlier this morning. Those our 193 00:10:52,480 --> 00:10:54,520 Speaker 1: surrell It's brought to you by Vaulvo Cars, White Planes. 194 00:10:54,600 --> 00:10:57,280 Speaker 1: Visit Volvo Cars White Planes dot com. Here is John 195 00:10:57,320 --> 00:10:59,920 Speaker 1: Tucker with the latest news headlines. Michael and tomber with 196 00:11:00,000 --> 00:11:03,400 Speaker 1: Publican presidential canadidates took last minuted appeals for a support 197 00:11:03,440 --> 00:11:07,760 Speaker 1: across Nevada on the eve of today's caucuses. Marco Rubio, meantime, 198 00:11:07,800 --> 00:11:12,320 Speaker 1: has been gathering support from Republican establishment figures since Friday. 199 00:11:12,320 --> 00:11:16,080 Speaker 1: He's ad a twelve new congressional or guoblatorial endorsements Donald 200 00:11:16,120 --> 00:11:19,640 Speaker 1: Trump and Ted ted Crews have added none. The Syrian 201 00:11:19,640 --> 00:11:22,240 Speaker 1: government says it accepts the proposed truce in that country. 202 00:11:22,440 --> 00:11:24,640 Speaker 1: The official anouncement comes a day after the US and 203 00:11:24,720 --> 00:11:27,600 Speaker 1: Russia agreed on a new cease fire for Syria that 204 00:11:27,640 --> 00:11:31,160 Speaker 1: will take effect on Saturday. In the Eastern Netherlands, of 205 00:11:31,200 --> 00:11:33,959 Speaker 1: commuter train derailed after slamming into a crane which was 206 00:11:34,000 --> 00:11:37,840 Speaker 1: crossing the tracks. One person reported dead, six others injured. 207 00:11:38,240 --> 00:11:40,839 Speaker 1: More than one hundred sixty passengers and crew slid down 208 00:11:40,880 --> 00:11:44,640 Speaker 1: emergency shoots and swirling snow after an engine fire forced 209 00:11:44,640 --> 00:11:48,600 Speaker 1: the japan Airlines domestic flight to aboard takeoff. Today, Global 210 00:11:48,640 --> 00:11:50,800 Speaker 1: News twenty four hours a day, powered by twenty four 211 00:11:50,840 --> 00:11:53,679 Speaker 1: hundred journalists, had more than one hundred fifty news pres 212 00:11:53,720 --> 00:11:57,160 Speaker 1: around the world. I'm John Tucker, Tom Jim, Thanks so much. 213 00:11:57,200 --> 00:12:01,079 Speaker 1: Gary's showing with US on economics, finance, investment. Your destination 214 00:12:01,200 --> 00:12:07,480 Speaker 1: Bloomberg Surveillance. Bloomberg Surveillance has brought you by your try 215 00:12:07,520 --> 00:12:10,160 Speaker 1: State BMW Center's visit the online at try State BMW 216 00:12:10,320 --> 00:12:12,320 Speaker 1: dot com at BMW to make only one thing the 217 00:12:12,400 --> 00:12:24,720 Speaker 1: ultimate driving machine. Global Business News twenty four hours a 218 00:12:24,800 --> 00:12:28,040 Speaker 1: day at Bloomberg dot com, the Radio plus Mobile Act 219 00:12:28,120 --> 00:12:31,559 Speaker 1: and on your radio. This is a Bloomberg Business flash 220 00:12:31,960 --> 00:12:34,199 Speaker 1: and I'm Karen Moscow. This updates brought to you by 221 00:12:34,200 --> 00:12:37,880 Speaker 1: Osener Amper. When entrepreneurs face challenges like choosing a business 222 00:12:37,920 --> 00:12:40,920 Speaker 1: structure or access to capital, they call the accountants and 223 00:12:40,960 --> 00:12:44,240 Speaker 1: advisors at Eisener Amper connect with them Eisner Emper dot com. 224 00:12:44,280 --> 00:12:48,600 Speaker 1: Slash tech times small size isn't stopping it from pursuing 225 00:12:48,640 --> 00:12:51,400 Speaker 1: an acquisition of Yahoo's core business. People familiar with the 226 00:12:51,400 --> 00:12:53,840 Speaker 1: matters say the one and a half billion dollar magazine 227 00:12:53,840 --> 00:12:56,760 Speaker 1: owner has heard a presentation from City Group bankers on 228 00:12:56,880 --> 00:12:59,480 Speaker 1: pursuing a deal to merge with Yahoo. Home Depot up 229 00:12:59,480 --> 00:13:01,760 Speaker 1: two and a half percent after fourth quarter profit topped 230 00:13:01,760 --> 00:13:05,400 Speaker 1: analysts estimates, SNP EVENI futures it will change now, Dona 231 00:13:05,440 --> 00:13:08,920 Speaker 1: point Dowie Mini futures up three, NASA documny futures down 232 00:13:08,920 --> 00:13:11,680 Speaker 1: seven and a half that action Germany's down eight ten percent. 233 00:13:11,960 --> 00:13:14,600 Speaker 1: Pen your treasury down thirty seconds, the yield one point 234 00:13:14,640 --> 00:13:17,199 Speaker 1: seven eight percent. Nimex s crude oil up three ten 235 00:13:17,280 --> 00:13:19,480 Speaker 1: percent or eight cents at thirty three forty seven a 236 00:13:19,520 --> 00:13:22,360 Speaker 1: barrel comex gold up six ten percent or six dollars 237 00:13:22,400 --> 00:13:25,600 Speaker 1: seventy cents to twelve sixteen eighty announced and the Euro 238 00:13:25,720 --> 00:13:27,800 Speaker 1: at a dollar oh nine nine seven at the end 239 00:13:27,920 --> 00:13:31,120 Speaker 1: one twelve point oh nine. That's a Bloomberg business flash, 240 00:13:31,200 --> 00:13:34,040 Speaker 1: Tom and Mith Karen. Thanks so much, Michael. I'm gonna 241 00:13:34,080 --> 00:13:39,120 Speaker 1: have you bringing our esteem guest. But unfortunately his pocketbooks 242 00:13:39,120 --> 00:13:42,199 Speaker 1: a little thin, so I've got to flog his book. 243 00:13:42,559 --> 00:13:47,199 Speaker 1: It is coming up on the twentieth anniversary of the 244 00:13:47,440 --> 00:13:51,600 Speaker 1: single most important book on price change ever written. It 245 00:13:51,760 --> 00:13:54,960 Speaker 1: is what I call the blue Book. It is called deflation. 246 00:13:55,679 --> 00:13:58,920 Speaker 1: Why it's coming, whether it's good or bad? And how 247 00:13:58,920 --> 00:14:03,559 Speaker 1: will it affect investments, business and personal affairs. I have 248 00:14:03,640 --> 00:14:06,760 Speaker 1: put children to school on my royalty checks from Gary 249 00:14:06,800 --> 00:14:12,520 Speaker 1: Shilling on flogging this book, Mike. It is clarity personified 250 00:14:13,120 --> 00:14:16,679 Speaker 1: and everything we get right and wrong about this pernicious 251 00:14:16,720 --> 00:14:20,840 Speaker 1: and strange thing read Deflation. I just put out on 252 00:14:20,880 --> 00:14:23,920 Speaker 1: Twitter and we'll flog it to death this morning as well. 253 00:14:25,720 --> 00:14:29,920 Speaker 1: Gary Cooper was in the movie It's Become the Collectors. 254 00:14:29,960 --> 00:14:33,080 Speaker 1: I suppose we should ask, are are we going to 255 00:14:33,120 --> 00:14:38,720 Speaker 1: get to deflation? I think so. There's just so much 256 00:14:38,800 --> 00:14:41,760 Speaker 1: excess supply in the world. And if you look historically 257 00:14:41,760 --> 00:14:46,920 Speaker 1: in this country, if you are in peacetime, and that's arguable, 258 00:14:46,960 --> 00:14:51,160 Speaker 1: of course, but in peacetime deflation is a norm. We've 259 00:14:51,160 --> 00:14:53,200 Speaker 1: looked at. We've looked at every year going back to 260 00:14:53,200 --> 00:14:56,280 Speaker 1: the seventeen forty nine. I don't know about seventeen forty eight, 261 00:14:56,280 --> 00:14:59,800 Speaker 1: but from seventeen forty nine, if you if you divide 262 00:14:59,840 --> 00:15:03,760 Speaker 1: him into war, wartime, and peace time, what you find 263 00:15:03,800 --> 00:15:06,680 Speaker 1: in in wartime that the average inflation rate was five 264 00:15:06,720 --> 00:15:09,560 Speaker 1: percent and in peace time it was a negative one 265 00:15:09,640 --> 00:15:12,160 Speaker 1: point two percent. Now you say, why is that, Well, 266 00:15:12,160 --> 00:15:15,800 Speaker 1: in wartime you have actuals spending led by government, too much, 267 00:15:15,880 --> 00:15:19,640 Speaker 1: too much demand relative to supply results. But in peace time, 268 00:15:20,080 --> 00:15:25,120 Speaker 1: the natural productivity, growth, the other factors, expansion the economy. Uh, 269 00:15:25,160 --> 00:15:28,440 Speaker 1: it tends to be deflationary. And and they'll say that's 270 00:15:28,480 --> 00:15:31,400 Speaker 1: a lot of history, and and it's fairly consistent throughout 271 00:15:31,440 --> 00:15:36,120 Speaker 1: that time. How are you measuring deflation then? Because I 272 00:15:36,280 --> 00:15:37,880 Speaker 1: know there's a lot of people out there who heard 273 00:15:37,880 --> 00:15:41,840 Speaker 1: what you just said about in peace time we have deflation, 274 00:15:42,120 --> 00:15:46,000 Speaker 1: Um saying, what the hell is he talking about? Well, um, 275 00:15:46,080 --> 00:15:49,560 Speaker 1: these are these are measured by hostel prices U. And 276 00:15:49,600 --> 00:15:52,000 Speaker 1: that's the most consistent numbers going back. Of course, the 277 00:15:52,080 --> 00:15:55,320 Speaker 1: government data doesn't really go back before World War Two, 278 00:15:55,960 --> 00:15:58,000 Speaker 1: but there are a lot of academic studies that piece 279 00:15:58,040 --> 00:16:01,960 Speaker 1: things together based on come on new prices, and they 280 00:16:02,000 --> 00:16:04,520 Speaker 1: tend to be, uh, they tend to be wholesale prices, 281 00:16:04,560 --> 00:16:08,760 Speaker 1: producer prices that go back that far. Uh. But you know, 282 00:16:08,840 --> 00:16:11,840 Speaker 1: I think I think there's enough consistency to say it 283 00:16:11,880 --> 00:16:15,240 Speaker 1: probably does measure it. And of course there's always lots 284 00:16:15,240 --> 00:16:19,080 Speaker 1: of problems with measuring inflation deflation. I mean, for example, uh, 285 00:16:19,200 --> 00:16:22,080 Speaker 1: Thomas Thomas showing either his cell phone and the powerful 286 00:16:22,160 --> 00:16:24,240 Speaker 1: cell phone. Well, you know that a lot of that 287 00:16:24,400 --> 00:16:28,160 Speaker 1: is not really reflected, uh, reflected in the price industries. 288 00:16:28,240 --> 00:16:30,080 Speaker 1: In other words, you get in a lot more power 289 00:16:30,480 --> 00:16:32,640 Speaker 1: there per dollar that you spend to buy a new 290 00:16:32,680 --> 00:16:36,760 Speaker 1: cell phone, but that does not reflected shooting deflation. I mean, 291 00:16:37,360 --> 00:16:41,720 Speaker 1: they're actual numbers that would show this. Well, the Commerce Department, Uh, 292 00:16:42,840 --> 00:16:46,080 Speaker 1: they try to they try to impute these things, uh, 293 00:16:46,280 --> 00:16:48,960 Speaker 1: and whether they're whether they do it correctly or not, 294 00:16:49,040 --> 00:16:52,080 Speaker 1: there's always always a question. But you know, the interesting 295 00:16:52,120 --> 00:16:54,280 Speaker 1: thing is if you look at it, Uh, I've got 296 00:16:54,280 --> 00:16:59,680 Speaker 1: a chart showing expectations of inflation. Uh, surveys and people 297 00:16:59,800 --> 00:17:06,040 Speaker 1: always overestimate inflation. It's consistent because what happens when anything 298 00:17:06,040 --> 00:17:08,080 Speaker 1: where the price goes up. You say, that's a double 299 00:17:08,119 --> 00:17:12,240 Speaker 1: personified giving me a raw deal if prices go down. 300 00:17:12,280 --> 00:17:14,520 Speaker 1: I'm a good bartner boy. I know how to shop, 301 00:17:14,600 --> 00:17:16,879 Speaker 1: I I get, I get a good price. So people 302 00:17:16,920 --> 00:17:21,760 Speaker 1: consistently overestimate inflation. Gary, why should we fear deflation? Is 303 00:17:21,760 --> 00:17:27,880 Speaker 1: it about wealth destruction? Does it say something about a nation? Well, deflation, 304 00:17:28,320 --> 00:17:31,399 Speaker 1: you know, and and and in the net book, Uh wrote, 305 00:17:31,440 --> 00:17:34,720 Speaker 1: you know, deflation, whether it's code or bad. You can 306 00:17:34,760 --> 00:17:37,000 Speaker 1: have good, folks. That would be the blue Book Deflation 307 00:17:37,040 --> 00:17:39,040 Speaker 1: when it's coming, whether it's good or bad, and how 308 00:17:39,080 --> 00:17:42,720 Speaker 1: it will affect your investments, business and personal affairs. It's 309 00:17:42,720 --> 00:17:45,600 Speaker 1: out on Facebook and Twitter right now. Continue. Thank you, Tom. 310 00:17:45,600 --> 00:17:48,120 Speaker 1: You you're you're roalthy. Just went up on that. Uh, 311 00:17:48,200 --> 00:17:51,480 Speaker 1: you're well, you can have good deflation like you had 312 00:17:51,960 --> 00:17:55,159 Speaker 1: in the nineteen twenties. Uh. Basically it was because of 313 00:17:55,240 --> 00:17:59,880 Speaker 1: huge productivity increases. Two big two big new drivers. One 314 00:18:00,080 --> 00:18:04,600 Speaker 1: is mass produced cars, and that brought with the roads, bridges, etcetera, hotels, etcetera. 315 00:18:04,800 --> 00:18:08,080 Speaker 1: And the other was electrificational homes and factories. And you've 316 00:18:08,080 --> 00:18:10,959 Speaker 1: got with that appliances. You couldn't run a radio without it. 317 00:18:11,320 --> 00:18:13,560 Speaker 1: And that's that's good deflation. In other words, you have 318 00:18:13,600 --> 00:18:16,760 Speaker 1: an excess supply. Uh, you're gonna have a bad deflation 319 00:18:17,080 --> 00:18:20,560 Speaker 1: of deficient demand. And that's what you had in the thirties. Uh. 320 00:18:20,600 --> 00:18:23,040 Speaker 1: And and in other words, you get the deflation with 321 00:18:23,320 --> 00:18:25,480 Speaker 1: supply seating demand. But how do you get there to 322 00:18:25,600 --> 00:18:29,640 Speaker 1: supply go up demand go down? Now? What's happening right now? Well, 323 00:18:29,640 --> 00:18:31,919 Speaker 1: what's happening right now is a little of both. And 324 00:18:31,960 --> 00:18:34,120 Speaker 1: the reason that central banks are so scared of it 325 00:18:34,160 --> 00:18:37,440 Speaker 1: is because of the of the of the bad deflation 326 00:18:37,520 --> 00:18:40,800 Speaker 1: of the last twenty years in Japan. And what happens 327 00:18:40,840 --> 00:18:44,720 Speaker 1: there is that prices are declining, and people say, I'm 328 00:18:44,720 --> 00:18:48,760 Speaker 1: gonna wait to buy. And when everybody waits to buy, 329 00:18:48,840 --> 00:18:50,879 Speaker 1: you know, let's say you need a new car, and 330 00:18:51,000 --> 00:18:53,439 Speaker 1: you say, well, prices are are declined, I'll wait to 331 00:18:53,480 --> 00:18:57,359 Speaker 1: buy because I can get one cheaper later. Well, everybody waits. 332 00:18:57,640 --> 00:19:01,000 Speaker 1: The the the the cars pile up on the dealer's lots. 333 00:19:01,000 --> 00:19:04,480 Speaker 1: That pushes prices down, and suspicions confirmed as a result, 334 00:19:04,640 --> 00:19:07,399 Speaker 1: you could slow growth. Japan in the last twenty years 335 00:19:07,400 --> 00:19:10,439 Speaker 1: has had real GDP growth at one point one percent 336 00:19:11,040 --> 00:19:15,399 Speaker 1: annually on average, and and they've had deflation more years 337 00:19:15,400 --> 00:19:18,679 Speaker 1: than not. And that's what scares I agree. I agree 338 00:19:18,680 --> 00:19:22,040 Speaker 1: that it's about GDP and the wealth construct of the nitue, 339 00:19:22,040 --> 00:19:25,000 Speaker 1: and it's it's also about debt and another and this 340 00:19:25,080 --> 00:19:27,760 Speaker 1: is another concern of central banks because and they talk 341 00:19:27,840 --> 00:19:31,840 Speaker 1: about this all the time, because debt in real terms, 342 00:19:31,840 --> 00:19:34,280 Speaker 1: goes up. In other words, if you have a debt, 343 00:19:34,359 --> 00:19:37,239 Speaker 1: you owe so many million dollars, Okay, that is not 344 00:19:37,280 --> 00:19:41,240 Speaker 1: going to change in deflation, but your income, your profits, 345 00:19:41,280 --> 00:19:43,920 Speaker 1: your ability to service that debt are going to go down. 346 00:19:44,520 --> 00:19:48,359 Speaker 1: So it increases bankruptcies and discourages borrowing. Garret. Thank you 347 00:19:48,440 --> 00:19:51,359 Speaker 1: so much, Shilling or this thanks with a huge response 348 00:19:51,440 --> 00:19:56,040 Speaker 1: out on social media to Mr Shillings appearance today. Futures 349 00:19:56,040 --> 00:19:59,800 Speaker 1: were negative for Shilling lifts the market. We're flat. It's 350 00:20:00,000 --> 00:20:08,280 Speaker 1: Boomberg surveillance. Bloomberg surveillance brought you by s c n B. 351 00:20:08,480 --> 00:20:10,399 Speaker 1: The Bank for Business is on the move. Are you 352 00:20:10,480 --> 00:20:13,119 Speaker 1: looking for a right banking partner? Go to s c 353 00:20:13,280 --> 00:20:15,600 Speaker 1: NB dot com to learn more Now open a Long 354 00:20:15,640 --> 00:20:23,360 Speaker 1: Island city. Get your business moving with st n B 355 00:20:23,359 --> 00:20:27,680 Speaker 1: broadcasting live to New York, Gloomberg eleventh, Rio to Washington, 356 00:20:27,760 --> 00:20:32,760 Speaker 1: d C, Bloomberg to Boston, Bloomberg twelve Honors, to San Francisco, 357 00:20:32,920 --> 00:20:37,320 Speaker 1: Bloomberg to the Country Series Exam Channel one ninety and 358 00:20:37,480 --> 00:20:41,480 Speaker 1: around the globe, the Bloomberg Radio Plus appened Bloomberg dot Com. 359 00:20:41,520 --> 00:20:46,680 Speaker 1: This is Bloomberg Surveillance. Good morning. It is seven thirty 360 00:20:46,680 --> 00:20:49,080 Speaker 1: on Law Street. I might col McKee along with Tom Keene, 361 00:20:49,080 --> 00:20:52,840 Speaker 1: were two hours away from the opening of trading today. 362 00:20:52,880 --> 00:20:55,159 Speaker 1: With futures flat on the day. Here's some of the 363 00:20:55,200 --> 00:20:59,080 Speaker 1: news you need to know from American companies. Home Depot 364 00:20:59,160 --> 00:21:01,800 Speaker 1: fourth quarter earnings share a dollar seventeen, better than the 365 00:21:01,920 --> 00:21:05,600 Speaker 1: estimate of a dollar ten revenue of twenty point nine 366 00:21:05,640 --> 00:21:09,160 Speaker 1: eight billion, better than the twenty point four billion consensus forecast. 367 00:21:09,240 --> 00:21:13,280 Speaker 1: Home Depot shares up by UH at this point two 368 00:21:13,320 --> 00:21:17,800 Speaker 1: point six percent UH in early trading. Western Digital plans 369 00:21:17,800 --> 00:21:20,200 Speaker 1: to buy sand Disc for about nineteen billion in cash 370 00:21:20,200 --> 00:21:23,040 Speaker 1: and shares. Western Digital will pay sixty seven fifty a 371 00:21:23,080 --> 00:21:26,439 Speaker 1: share in cash and just under a quarter of a share. 372 00:21:26,480 --> 00:21:29,600 Speaker 1: Western Digital shares down by six point seven percent. Sand 373 00:21:29,600 --> 00:21:33,680 Speaker 1: Dix shares off four point seven percent. United Technology says 374 00:21:33,680 --> 00:21:35,640 Speaker 1: it walked away from Carlamer he talks about a merger 375 00:21:35,680 --> 00:21:38,320 Speaker 1: with Honeywell doing part too, concerns that a deal wouldn't 376 00:21:38,320 --> 00:21:41,560 Speaker 1: win approval from antitrust authorities. Honeywell last week offering a 377 00:21:41,640 --> 00:21:45,040 Speaker 1: hundred and eight dollars a share for United Technologies and 378 00:21:45,040 --> 00:21:48,040 Speaker 1: Microsoft co founder Bill Gates siding with the government in 379 00:21:48,080 --> 00:21:50,840 Speaker 1: its dispute over Apple's refusal to break into a terrorist 380 00:21:50,920 --> 00:21:53,960 Speaker 1: iPhone that according to The Financial Times, Gates will be 381 00:21:54,000 --> 00:21:58,239 Speaker 1: with us in about thirty minutes here on Bloomberg Surveillance. Now, 382 00:21:58,320 --> 00:22:01,200 Speaker 1: let's check in with John Tucker at the latest world 383 00:22:01,280 --> 00:22:04,240 Speaker 1: and national headlines. John and Good Morning, Michael Pole Show. 384 00:22:04,320 --> 00:22:07,800 Speaker 1: Donald Trump plays to win his third consecutive Republican presidential 385 00:22:07,840 --> 00:22:12,480 Speaker 1: nominating contest tonight when Nevado holds its caucuses. Low participation 386 00:22:12,640 --> 00:22:16,960 Speaker 1: an electrical electoral system that rewards political insiders, could di 387 00:22:16,960 --> 00:22:21,160 Speaker 1: manish the magnitude of any victory. Latest Quinnipiac Pole has 388 00:22:21,160 --> 00:22:24,880 Speaker 1: no Trump leading Ohio Governor John Kasy thirty one percent 389 00:22:24,920 --> 00:22:28,760 Speaker 1: among the state's likely Republican presidential primary voters, winning his 390 00:22:28,840 --> 00:22:33,720 Speaker 1: home states March fifteenth primary is critical to cass presidential 391 00:22:33,840 --> 00:22:36,720 Speaker 1: bid and members of Congress trying to head off A 392 00:22:36,760 --> 00:22:40,240 Speaker 1: new Jersey transit track authorized for March thirteenth. The last 393 00:22:40,280 --> 00:22:42,919 Speaker 1: time New Jersey Railroad employees walked off the job was 394 00:22:43,040 --> 00:22:47,240 Speaker 1: thirty three years ago. It displaced Manhattan commuters. They turned 395 00:22:47,280 --> 00:22:49,440 Speaker 1: to fill in charter buses. For more than a month, 396 00:22:49,560 --> 00:22:52,639 Speaker 1: Global News twenty four hours a day, cowered by our 397 00:22:52,640 --> 00:22:55,520 Speaker 1: twenty four hundred journalists had more than one hundred fifty 398 00:22:55,520 --> 00:22:59,760 Speaker 1: news videos around the world. I'm John Tucker Michael Time 399 00:22:59,800 --> 00:23:02,840 Speaker 1: now for the Rincontina Utter Group. Bloomberg NBC Sports Update 400 00:23:02,840 --> 00:23:06,000 Speaker 1: with John. All Right, my things going from bad the 401 00:23:06,000 --> 00:23:07,560 Speaker 1: worst for the Nicks, who had a little over a 402 00:23:07,560 --> 00:23:09,640 Speaker 1: month ago were five hundred trying to make the playoffs 403 00:23:09,640 --> 00:23:12,280 Speaker 1: there two and twelve. Since they lost sixth straight at home, 404 00:23:12,359 --> 00:23:14,920 Speaker 1: only Brooklyn and Philadelphia are behind them in the East. 405 00:23:15,160 --> 00:23:18,560 Speaker 1: Last night, Toronto won the second quarter thirty one to 406 00:23:18,680 --> 00:23:22,400 Speaker 1: fifteen and won the game ninety five. Nick's coach Kurt 407 00:23:22,480 --> 00:23:27,040 Speaker 1: Rambis watched the Raptors shoot. It takes five guys to 408 00:23:27,160 --> 00:23:29,680 Speaker 1: stuff the ball. It's not just the two guys involved 409 00:23:29,720 --> 00:23:32,440 Speaker 1: intimately in the pick and roll it takes all five guys, 410 00:23:33,000 --> 00:23:35,959 Speaker 1: and if if we can't get all five guys, engage 411 00:23:36,000 --> 00:23:38,920 Speaker 1: one guy, one guy makes a mistake. That's all. That's 412 00:23:38,960 --> 00:23:42,720 Speaker 1: all a good offensive team needs. Nix visit Indiana tomorrow. 413 00:23:42,760 --> 00:23:45,320 Speaker 1: Nets visit Portland tonight to start a nine game road 414 00:23:45,320 --> 00:23:48,679 Speaker 1: trip Golden State. Last night one at Atlanta. The Warriors 415 00:23:48,760 --> 00:23:52,440 Speaker 1: fifty and five, fastest ever to fifty wins. Rangers visit 416 00:23:52,480 --> 00:23:55,400 Speaker 1: the slumping Devils tonight. College hoops Miami be third ranked 417 00:23:55,440 --> 00:24:00,320 Speaker 1: Virginia locally, Ionna blew lead but still one. That's Yena 418 00:24:01,240 --> 00:24:04,720 Speaker 1: one and Tonio Cremarti's second stint as the Jets cornerback 419 00:24:04,840 --> 00:24:07,960 Speaker 1: is over released one season into a four year contract. 420 00:24:08,160 --> 00:24:10,520 Speaker 1: He was a disappointment in the Jet secondary. That saves 421 00:24:10,600 --> 00:24:13,399 Speaker 1: them eight million on the salary cap. With the Bloomberg 422 00:24:13,480 --> 00:24:17,360 Speaker 1: NBC Sports update, I'm John Stash. Thank you John. As 423 00:24:17,359 --> 00:24:20,800 Speaker 1: we mentioned, futures at the moment are basically flat, with 424 00:24:20,920 --> 00:24:25,280 Speaker 1: oil prices now higher on the day. West Texas up 425 00:24:25,280 --> 00:24:28,000 Speaker 1: by a tenth of a percent, Brent crude up eight 426 00:24:28,040 --> 00:24:32,280 Speaker 1: tenths of a percent. You're listening to Blomberg surveillance. This 427 00:24:32,359 --> 00:24:40,640 Speaker 1: is Bloomberg Radio worldwide welcome back to the surveillance. I'm 428 00:24:40,640 --> 00:24:43,520 Speaker 1: Michael McKee along with Tom Keane. On a day where 429 00:24:43,840 --> 00:24:46,840 Speaker 1: we aren't certain where markets are going to open. S 430 00:24:46,880 --> 00:24:50,359 Speaker 1: and P futures unchanged at the moment now evening futures 431 00:24:50,760 --> 00:24:53,680 Speaker 1: are up just six points, that's less than a tenth 432 00:24:53,680 --> 00:24:56,520 Speaker 1: of a percent. Nasdak Future is the only clear direction 433 00:24:56,560 --> 00:24:59,960 Speaker 1: at the moment, off seven points, that is almost two 434 00:25:00,119 --> 00:25:03,760 Speaker 1: tenths of a percent. Although they have paired their losses 435 00:25:03,800 --> 00:25:06,240 Speaker 1: as well. The stock six hundered off by a point 436 00:25:06,359 --> 00:25:09,080 Speaker 1: right now two tents of a percent. The Bloomberg n 437 00:25:09,160 --> 00:25:10,919 Speaker 1: j I T STEM Report is brought to by New 438 00:25:11,000 --> 00:25:14,080 Speaker 1: Jersey Institute of Technology, partnering with government and industry to 439 00:25:14,119 --> 00:25:17,280 Speaker 1: apply the university's world class research assets to innovate and 440 00:25:17,359 --> 00:25:19,879 Speaker 1: spur economic growth. Learn more at n j I T 441 00:25:20,160 --> 00:25:24,040 Speaker 1: dot EU. Here's Bob Michael, thanks very much, And at 442 00:25:24,080 --> 00:25:27,240 Speaker 1: seven thirty five on Wall Street, here's what's making news 443 00:25:27,320 --> 00:25:32,160 Speaker 1: in science, Technology, engineering, and math. Microsoft co founder Bill 444 00:25:32,280 --> 00:25:36,359 Speaker 1: Gates is backing the government in that dispute with Apple 445 00:25:36,520 --> 00:25:41,280 Speaker 1: over a terrorist iPhone. Industry leaders are generally siding with Apple, 446 00:25:41,680 --> 00:25:44,720 Speaker 1: which is refusing a court order to help the FBI 447 00:25:44,880 --> 00:25:48,480 Speaker 1: break into the device. Gates tells the Financial Times the 448 00:25:48,520 --> 00:25:52,040 Speaker 1: government order is really no different than asking for bank 449 00:25:52,160 --> 00:25:56,000 Speaker 1: and telephone records. Apple has warned the order creates a 450 00:25:56,119 --> 00:25:59,840 Speaker 1: dangerous precedent and a reminder. Please join us at eight 451 00:26:00,080 --> 00:26:02,199 Speaker 1: on Wall Street Time when we speak to Bill and 452 00:26:02,240 --> 00:26:06,800 Speaker 1: Melinda Gates on both Bloomberg Radio and television, and that 453 00:26:06,960 --> 00:26:09,800 Speaker 1: is this morning's Bloomberg and j I. T. Stone Reports. 454 00:26:10,160 --> 00:26:13,040 Speaker 1: Ban Thank you very much. Well. We raised a question 455 00:26:13,119 --> 00:26:16,600 Speaker 1: yesterday with Lisa Brown. It's about the exposure of banks 456 00:26:16,640 --> 00:26:19,359 Speaker 1: to the energy sector, and there was some question about 457 00:26:19,800 --> 00:26:23,600 Speaker 1: just how bad things might get. Gerard Cassidy of RBC 458 00:26:23,760 --> 00:26:27,040 Speaker 1: Capital Markets, our old friend has actually been looking into 459 00:26:27,080 --> 00:26:29,959 Speaker 1: this and he has some numbers on it all. And 460 00:26:30,040 --> 00:26:32,679 Speaker 1: I might start by noting, Gerard, I think you're attending 461 00:26:32,760 --> 00:26:35,879 Speaker 1: JP Morgan's investor day today. The bank putting out a 462 00:26:35,880 --> 00:26:40,119 Speaker 1: statement suggesting that if oil prices stay about where they are, uh, 463 00:26:40,240 --> 00:26:43,280 Speaker 1: it would mean seven fifty million dollars in additional reserves 464 00:26:43,320 --> 00:26:45,800 Speaker 1: for them. If they dropped to twenty five dollars, it's 465 00:26:46,000 --> 00:26:48,640 Speaker 1: one and a half billion, which sounds like a lot 466 00:26:48,640 --> 00:26:50,760 Speaker 1: of money, but in the context of these big banks, 467 00:26:51,000 --> 00:26:55,160 Speaker 1: the energy exposure, you right, aren't that bad? Isn't that bad? 468 00:26:56,080 --> 00:26:59,399 Speaker 1: That's correct, Mike. When you specifically, if you look at 469 00:26:59,480 --> 00:27:02,560 Speaker 1: JPM Oregon, we have to put it in the context 470 00:27:02,800 --> 00:27:07,280 Speaker 1: of their earnings. Last year. They earned twenty four billion dollars, 471 00:27:07,320 --> 00:27:09,639 Speaker 1: so even if they were to see oil prices go 472 00:27:09,720 --> 00:27:12,680 Speaker 1: to twenty five I think it's very manageable. And that's 473 00:27:12,680 --> 00:27:15,280 Speaker 1: true for the top twenty banks. When we look at 474 00:27:15,280 --> 00:27:18,560 Speaker 1: the exposure for the top twenty banks as a percentage 475 00:27:18,600 --> 00:27:21,359 Speaker 1: of total loans, it's about five and a half percent, 476 00:27:21,600 --> 00:27:25,160 Speaker 1: So it's very manageable even at these very low prices. Now, 477 00:27:25,760 --> 00:27:29,200 Speaker 1: the rest of the banks, uh, they've been We've had 478 00:27:29,400 --> 00:27:32,000 Speaker 1: the sell off this year because people are concerned that 479 00:27:32,040 --> 00:27:35,520 Speaker 1: the banking industry could blow up over oil prices, especially 480 00:27:35,520 --> 00:27:39,320 Speaker 1: when we get to the March resets on loans to 481 00:27:39,920 --> 00:27:42,280 Speaker 1: some of these energy companies that may not be able 482 00:27:42,320 --> 00:27:46,240 Speaker 1: to make it go at twenty five to thirty dollar oil. No, 483 00:27:46,440 --> 00:27:49,040 Speaker 1: I think that's contributed to the sell off. I would 484 00:27:49,040 --> 00:27:52,280 Speaker 1: agree with you. Unfortunately, we think it's a little misplaced. 485 00:27:53,240 --> 00:27:56,160 Speaker 1: I would be more concerned about the Fed not raising 486 00:27:56,600 --> 00:27:58,840 Speaker 1: FED fund rates this year, which I think has been 487 00:27:58,880 --> 00:28:01,520 Speaker 1: the main contributor to the sell off that I would 488 00:28:01,560 --> 00:28:06,000 Speaker 1: about the energy concerns because we're not expecting any deprecation 489 00:28:06,080 --> 00:28:09,600 Speaker 1: of book value, suggesting losses that would reduce your book value. 490 00:28:09,760 --> 00:28:12,800 Speaker 1: This is really different than the nineteen eighties when the 491 00:28:12,880 --> 00:28:16,320 Speaker 1: exposure to energy was much greater and we lost nine 492 00:28:16,320 --> 00:28:19,159 Speaker 1: out of the ten largest banks in Texas due to 493 00:28:19,160 --> 00:28:21,639 Speaker 1: the drop in oil prices. Are we going to lose 494 00:28:21,720 --> 00:28:25,560 Speaker 1: any banks, even smaller banks. That's an interesting question, like 495 00:28:25,800 --> 00:28:29,040 Speaker 1: because there's a possibility the smaller banks that have physically 496 00:28:29,119 --> 00:28:32,800 Speaker 1: located in Texas, in Houston or Midland, that have commercial 497 00:28:32,840 --> 00:28:35,960 Speaker 1: realistate loans on top of oil loans, those are the 498 00:28:36,040 --> 00:28:39,120 Speaker 1: vulnerable ones. But at this point it's too early to 499 00:28:39,160 --> 00:28:41,480 Speaker 1: say that. But clearly the smaller banks would be far 500 00:28:41,520 --> 00:28:44,720 Speaker 1: more vulnerable because of the commercial realist and exposure than 501 00:28:44,840 --> 00:28:47,800 Speaker 1: just energy exposure. But you say we should worry more 502 00:28:47,880 --> 00:28:51,040 Speaker 1: about Janet Yellen sitting on her hands. I think that's 503 00:28:51,080 --> 00:28:53,640 Speaker 1: the real issue here. And if we see the U 504 00:28:53,720 --> 00:28:56,120 Speaker 1: s economy gaining some strains in the spring with the 505 00:28:56,160 --> 00:28:59,920 Speaker 1: housing market, and there's a nascent pick up in manufact 506 00:29:00,040 --> 00:29:02,880 Speaker 1: xturing in the last thirty days, if that starts to 507 00:29:02,920 --> 00:29:05,840 Speaker 1: accelerate even further, because of the strength of the auto 508 00:29:05,880 --> 00:29:09,120 Speaker 1: industry and the set decides to move come June. Nobody 509 00:29:09,160 --> 00:29:11,640 Speaker 1: expect the March move that would be a real positive 510 00:29:11,640 --> 00:29:14,040 Speaker 1: for the bank stocks. For I let you go. JP 511 00:29:14,080 --> 00:29:16,960 Speaker 1: Morgan ahead of Investor Day has released a set of 512 00:29:17,000 --> 00:29:22,160 Speaker 1: slides and statement UH basically suggesting that as usual, things 513 00:29:22,200 --> 00:29:25,480 Speaker 1: are just fine over at Fortress Diamond. They're forecasting at 514 00:29:25,520 --> 00:29:29,760 Speaker 1: fourteen return on tangible common equity over a three year 515 00:29:29,840 --> 00:29:34,120 Speaker 1: profit outlook. Um, what do you think of what they 516 00:29:34,160 --> 00:29:38,800 Speaker 1: are saying this morning? So far? What they've released in 517 00:29:38,880 --> 00:29:41,880 Speaker 1: their slide deck is very impressive. They tell you that 518 00:29:42,080 --> 00:29:45,800 Speaker 1: they have shown the best growth amongst our biggest banks, 519 00:29:46,200 --> 00:29:51,200 Speaker 1: and most importantly, what drives value for the stocks, all stocks, 520 00:29:51,240 --> 00:29:55,000 Speaker 1: not just JP Morgan, is the growth intangible book value, 521 00:29:55,240 --> 00:29:58,360 Speaker 1: and they demonstrate with their numbers how they have been 522 00:29:58,400 --> 00:30:02,120 Speaker 1: a leading creator of tangible book value growth and I 523 00:30:02,160 --> 00:30:04,719 Speaker 1: expect that to continue because of the strength of that 524 00:30:04,800 --> 00:30:08,000 Speaker 1: management team and the position that their businesses are in 525 00:30:08,440 --> 00:30:10,640 Speaker 1: not only here in the US, but around the globe. 526 00:30:11,080 --> 00:30:14,640 Speaker 1: Interesting Jamie Diamond suggests they're going to focus on still 527 00:30:14,800 --> 00:30:19,200 Speaker 1: cutting expenses. My that is still a huge issue for 528 00:30:19,200 --> 00:30:22,240 Speaker 1: the industry, particularly even at the fed raises rates once 529 00:30:22,320 --> 00:30:25,200 Speaker 1: or twice this year. We need to see a number 530 00:30:25,240 --> 00:30:28,720 Speaker 1: of branches who shut down in this industry as technology 531 00:30:28,760 --> 00:30:32,320 Speaker 1: and the digital channel is making huge advances and delivering 532 00:30:32,360 --> 00:30:34,600 Speaker 1: retail product and I think this is going to lead 533 00:30:34,640 --> 00:30:37,960 Speaker 1: to bigger consolidation in two thousand and seventeen as well. 534 00:30:38,360 --> 00:30:41,360 Speaker 1: Gerard Cassidy, RBC Capital Markets, thank you very much for 535 00:30:41,600 --> 00:30:44,880 Speaker 1: joining us. We'll let you get over to UH talk Mr. 536 00:30:44,960 --> 00:30:46,959 Speaker 1: Diamond and Company and see what else you can learn. 537 00:30:47,000 --> 00:30:50,640 Speaker 1: Have you back soon here on Bloomberg Surveillance. JP Morgan 538 00:30:50,800 --> 00:30:55,440 Speaker 1: shares UM just beginning to trade in pre market, down 539 00:30:55,480 --> 00:30:59,320 Speaker 1: by about half a percent right now, fifty eight dollars 540 00:30:59,440 --> 00:31:02,479 Speaker 1: thirty and snow uh significant movement. They were up one 541 00:31:02,520 --> 00:31:07,440 Speaker 1: point three yesterday on the day. As we continue to 542 00:31:07,440 --> 00:31:13,560 Speaker 1: monitor futures, markets generally flat S and p DAL futures 543 00:31:13,600 --> 00:31:16,880 Speaker 1: are flat right now. Nasdaq features off by a tenth 544 00:31:16,880 --> 00:31:22,480 Speaker 1: of a percent. This is Bloomberg Radio. Bloombergs Avouance brought 545 00:31:22,520 --> 00:31:24,440 Speaker 1: you by your Mercedes Benz Tri State dealer. When it 546 00:31:24,440 --> 00:31:26,680 Speaker 1: comes to winter elements, put your best four wheels forward 547 00:31:26,720 --> 00:31:29,680 Speaker 1: with Mercedes Benz Formatic all wheel Drive visitor Mercedes Benz 548 00:31:29,720 --> 00:31:38,640 Speaker 1: tri State Dealer for a test drive. Today. Global Business 549 00:31:38,680 --> 00:31:41,640 Speaker 1: News twenty four hours a day at Bloomberg dot com, 550 00:31:41,880 --> 00:31:44,720 Speaker 1: the Radio plus Mobile Act and on your radio. This 551 00:31:45,120 --> 00:31:48,520 Speaker 1: is a Bloomberg Business Flash and I'm Karen Moscow. This 552 00:31:48,640 --> 00:31:52,000 Speaker 1: updates brought to you by cbo EVIX Options and Futures. 553 00:31:52,080 --> 00:31:55,480 Speaker 1: Volatility can be harnessed with cbo EVIS Options and Futures. 554 00:31:55,720 --> 00:31:58,400 Speaker 1: See disclosures and learn more at cbo e dot com. 555 00:31:58,440 --> 00:32:02,520 Speaker 1: Slash Powerful Outcomes. VIX futures are now little change with 556 00:32:02,680 --> 00:32:05,360 Speaker 1: snp E many futures down to point, DOWIE Mini futures 557 00:32:05,400 --> 00:32:08,120 Speaker 1: up six and nasdac E mini futures down seven. The 558 00:32:08,200 --> 00:32:10,800 Speaker 1: decks in Germany's down eight tenths per cent ten, Your 559 00:32:10,840 --> 00:32:13,480 Speaker 1: treasury down nine thirty seconds. The yield one point seven 560 00:32:13,520 --> 00:32:15,880 Speaker 1: eight percent yield on a two year point seven six 561 00:32:15,960 --> 00:32:18,640 Speaker 1: percent ni Make screwed oil down three tenths per cent 562 00:32:18,720 --> 00:32:20,760 Speaker 1: or ten cents at thirty three twenty nine. A barrel 563 00:32:20,960 --> 00:32:23,400 Speaker 1: co make schooled up six tenths percent or seven dollars 564 00:32:23,400 --> 00:32:26,680 Speaker 1: twenty cents at twelve seventeen thirty. Announced the euros at 565 00:32:26,680 --> 00:32:29,240 Speaker 1: a dollar ten o four the end at one twelve 566 00:32:29,240 --> 00:32:33,080 Speaker 1: and that's a Bloomberg Business Flash, Tom and Mike, Thank you, Karen. 567 00:32:33,240 --> 00:32:36,040 Speaker 1: It is selection day again yet again. This time it 568 00:32:36,200 --> 00:32:40,640 Speaker 1: is the Nevada Republican caucuses underway, where they will be 569 00:32:41,000 --> 00:32:43,760 Speaker 1: when people wake up out there. Good morning, Las Vegas, 570 00:32:44,000 --> 00:32:45,760 Speaker 1: and good morning to Chuck Todd. He's the host of 571 00:32:45,840 --> 00:32:48,600 Speaker 1: NBC's Meet the Press. You can hear at Sunday's here 572 00:32:48,840 --> 00:32:52,280 Speaker 1: on Bloomberg Radio eleven o'clock and three o'clock. Chuck, did 573 00:32:52,280 --> 00:32:54,600 Speaker 1: you manage a scamma trip to Vegas for this so 574 00:32:54,640 --> 00:32:57,480 Speaker 1: you can report on this? Well? I I was in 575 00:32:57,560 --> 00:32:59,640 Speaker 1: Vegas last week like this. I don't want to people 576 00:32:59,640 --> 00:33:03,360 Speaker 1: to get their hope stuff. This is the Nevada Republican 577 00:33:03,360 --> 00:33:06,320 Speaker 1: Party last year took three days to count thirty three 578 00:33:06,320 --> 00:33:11,120 Speaker 1: thousand balance. I'm not that very confident that we're gonna 579 00:33:11,240 --> 00:33:14,239 Speaker 1: know much tonight. So anybody that thought about staying up 580 00:33:14,240 --> 00:33:17,240 Speaker 1: to watch coverage tonight. UM, I know my bosses won't 581 00:33:17,280 --> 00:33:19,640 Speaker 1: like me saying this, but it isn't worth it. Just 582 00:33:20,160 --> 00:33:24,000 Speaker 1: Just get up in the morning, Um, turn on Bloomberg 583 00:33:24,080 --> 00:33:28,200 Speaker 1: Radio and and find out what happened. And he's got 584 00:33:28,200 --> 00:33:32,920 Speaker 1: down the shameless plug. Um is this gonna matter? In 585 00:33:32,960 --> 00:33:35,840 Speaker 1: the long run, given the data, Novata won't matter a 586 00:33:35,840 --> 00:33:39,240 Speaker 1: bit unless unless somehow Trump loses. Is there any chance? 587 00:33:43,320 --> 00:33:45,800 Speaker 1: The only reason I think there's a chance is this 588 00:33:45,880 --> 00:33:49,280 Speaker 1: is such an arcane nobody knows about it and and 589 00:33:49,320 --> 00:33:51,520 Speaker 1: route meaning you know it had a and it's a 590 00:33:51,640 --> 00:33:54,720 Speaker 1: paltry turnout four years ago. Marco Rubio is the only 591 00:33:54,720 --> 00:33:59,320 Speaker 1: person that's organized. So you know, it's the last test 592 00:33:59,400 --> 00:34:04,040 Speaker 1: that's all about organization for the popularity. So look, I 593 00:34:04,440 --> 00:34:08,000 Speaker 1: know everybody assumes Trump's gonna win. And you know if 594 00:34:08,040 --> 00:34:10,319 Speaker 1: just the casual, if casual people show up, you will, 595 00:34:11,520 --> 00:34:14,520 Speaker 1: But you know I wouldn't. I'd be surprised, but not 596 00:34:14,640 --> 00:34:17,239 Speaker 1: shocked if somehow Rubyo want I want to stand the 597 00:34:17,280 --> 00:34:21,280 Speaker 1: Republicans from moment and talk about Super Tuesday, the narrative 598 00:34:21,360 --> 00:34:23,920 Speaker 1: on the Democratic side, as we go into the Super 599 00:34:23,960 --> 00:34:26,719 Speaker 1: Tuesday Southern states, you bring in the minority voters and 600 00:34:27,239 --> 00:34:30,320 Speaker 1: that helps Hillary Clinton. We go into Super Tuesday, we 601 00:34:30,440 --> 00:34:32,719 Speaker 1: bring in the minority voters to the extent they vote 602 00:34:32,760 --> 00:34:35,960 Speaker 1: in the Republican primaries. How does that affect the Donald 603 00:34:36,120 --> 00:34:40,640 Speaker 1: and or Marco Rubio Ted Cruz, Well, there's not that 604 00:34:40,719 --> 00:34:44,200 Speaker 1: many minority voters vote in the Republican primaries. Um, outside 605 00:34:44,239 --> 00:34:46,520 Speaker 1: of Florida and Texas, there is a chunk of the 606 00:34:46,560 --> 00:34:51,120 Speaker 1: Hispanic vote in both states that will show up in Texas, 607 00:34:51,360 --> 00:34:55,160 Speaker 1: you know, ten, but not not a significant amount to 608 00:34:55,239 --> 00:34:58,640 Speaker 1: have to have much of an impact on the Republican side. 609 00:34:58,680 --> 00:35:01,840 Speaker 1: I mean, it's it's just the nature of the Republican 610 00:35:01,920 --> 00:35:05,800 Speaker 1: electorate right now. But going into Super Tuesday, look, I 611 00:35:05,880 --> 00:35:08,600 Speaker 1: think Super Tuesday is more about trying to figure out 612 00:35:08,760 --> 00:35:12,480 Speaker 1: if you're Marco Rubio, You're you're you're secretly hoping for 613 00:35:12,560 --> 00:35:14,640 Speaker 1: Trump to win at least one state, and that state 614 00:35:14,719 --> 00:35:19,760 Speaker 1: of Texas, because because it takes that cruise, the cleatest 615 00:35:19,760 --> 00:35:21,719 Speaker 1: way for Rubio to get into it one on one 616 00:35:22,200 --> 00:35:23,920 Speaker 1: is to get Cruise out of this. And the fastest 617 00:35:23,960 --> 00:35:27,200 Speaker 1: way to to sort of force crews out is to 618 00:35:27,360 --> 00:35:29,879 Speaker 1: embarrass them is to basically say, hey, you couldn't even 619 00:35:29,880 --> 00:35:31,960 Speaker 1: win your home state. It's time, right, Chuck, what you 620 00:35:32,040 --> 00:35:35,840 Speaker 1: do so well as a national Minutia. Mr Kasich enjoying 621 00:35:35,880 --> 00:35:39,320 Speaker 1: the Sandy Spring City Hall last night in New Gingrich 622 00:35:39,400 --> 00:35:42,799 Speaker 1: is Georgia. I remember new four years ago. I guess 623 00:35:42,880 --> 00:35:46,960 Speaker 1: he took Georgia. Tell me about adjacent c in the 624 00:35:47,080 --> 00:35:52,359 Speaker 1: Super Tuesday states. We understand Mr Sanders and adjacent CET 625 00:35:52,400 --> 00:35:56,239 Speaker 1: in New Hampshire. Does Mr Rubio have adjacent CE with 626 00:35:56,400 --> 00:36:00,399 Speaker 1: Georgia or is he is just foreign there is Mr Trump. Yeah, 627 00:36:00,440 --> 00:36:02,000 Speaker 1: it's just as born there. And that part of that 628 00:36:02,160 --> 00:36:04,479 Speaker 1: is because look, but it only helps if you share 629 00:36:04,520 --> 00:36:08,520 Speaker 1: media markets. Right, Vermont and New Hampshire actually share media markets. 630 00:36:08,560 --> 00:36:12,160 Speaker 1: People that live in Vermont watch New Hampshire television vice versa. Um. 631 00:36:12,760 --> 00:36:16,000 Speaker 1: That that's why you get that neighboring state thing helps. 632 00:36:16,040 --> 00:36:19,320 Speaker 1: Ditto with Massachusetts, New Hampshire, things like that. That doesn't 633 00:36:19,360 --> 00:36:22,120 Speaker 1: exist really with Florida and Georgia. I mean outside of Jacksonville. 634 00:36:22,320 --> 00:36:25,440 Speaker 1: You know that that is a shared media art in Tallahassee. 635 00:36:25,840 --> 00:36:28,239 Speaker 1: And once right, it's the largest cocktail party. It's really 636 00:36:28,280 --> 00:36:30,200 Speaker 1: only about a college football game to anything else. So 637 00:36:30,880 --> 00:36:34,520 Speaker 1: um no, there, there isn't that sort of um, that 638 00:36:34,719 --> 00:36:38,200 Speaker 1: sort of impact um particular to Florida, just because Florida 639 00:36:38,239 --> 00:36:42,040 Speaker 1: has got so many of its own unique media markets. 640 00:36:42,080 --> 00:36:44,200 Speaker 1: So that isn't that isn't gonna help him. Look, what 641 00:36:44,320 --> 00:36:47,360 Speaker 1: Rubio needs, practical Rubio needs right now is casic to 642 00:36:47,400 --> 00:36:51,080 Speaker 1: get out. Arguably a bigger problem for him going into 643 00:36:51,120 --> 00:36:54,239 Speaker 1: Super Tuesday than cruised. Eventually any screws out of the wedding, 644 00:36:54,600 --> 00:36:56,640 Speaker 1: but kask is in the way right now. Well, one 645 00:36:56,680 --> 00:36:59,960 Speaker 1: of the problems there is that while Rubio piles of 646 00:37:00,040 --> 00:37:02,920 Speaker 1: the political endorsements, Casey's piling up the money announcing a 647 00:37:03,000 --> 00:37:06,719 Speaker 1: series of hedge fund helpers over the last couple of days. Well, 648 00:37:06,800 --> 00:37:09,320 Speaker 1: we'll see if if it's real. I mean, you know, 649 00:37:09,600 --> 00:37:11,200 Speaker 1: he's had a few people. But how big of the 650 00:37:11,280 --> 00:37:13,399 Speaker 1: checks are they gonna write? Are they writing five million 651 00:37:13,440 --> 00:37:15,640 Speaker 1: dollars checks? Are they running to everything dollar checks? When 652 00:37:16,920 --> 00:37:19,759 Speaker 1: big difference? Chuck, What is the distinctive feature of this 653 00:37:19,920 --> 00:37:22,320 Speaker 1: Super Tuesday? I mean I went back and I skimmed 654 00:37:22,800 --> 00:37:24,480 Speaker 1: the history of them back to I believe it was 655 00:37:25,840 --> 00:37:28,239 Speaker 1: when we started this bal At you were there, I know, 656 00:37:28,680 --> 00:37:33,240 Speaker 1: covering all seven states, whatever it was. But it's Super Tuesday. 657 00:37:33,320 --> 00:37:36,719 Speaker 1: I get the southern thing, Massachusetts, Bernie's gonna do this? 658 00:37:37,520 --> 00:37:40,000 Speaker 1: Is this so what that we're a lot smarter on 659 00:37:40,160 --> 00:37:44,840 Speaker 1: Super Wednesday the day after? Well, I mean I think that. 660 00:37:45,120 --> 00:37:47,440 Speaker 1: I mean, if you say, what's the distinguishing characteristic of 661 00:37:47,520 --> 00:37:50,319 Speaker 1: this one, is that it's back to be distinct uh, 662 00:37:50,680 --> 00:37:53,719 Speaker 1: mostly southern. You know, the whole. Super Tuesday started as 663 00:37:53,719 --> 00:37:57,080 Speaker 1: a Southern idea. Was back when Southern Democrats were looking 664 00:37:57,120 --> 00:37:59,960 Speaker 1: for a way to stop from getting the Democratic nomination. 665 00:38:00,000 --> 00:38:02,480 Speaker 1: It so back back in the day, that was its 666 00:38:02,520 --> 00:38:06,680 Speaker 1: original origin. It was about stopping the doing, trying to 667 00:38:06,840 --> 00:38:09,319 Speaker 1: come up with a strategy that to get the Bill 668 00:38:09,360 --> 00:38:11,400 Speaker 1: Clintons of the world, or at the time Chuck rob 669 00:38:11,719 --> 00:38:13,839 Speaker 1: who was a rising star in Virginia at the time, 670 00:38:14,520 --> 00:38:17,399 Speaker 1: give them an opportunity to playing delegates. But it's never 671 00:38:17,880 --> 00:38:19,919 Speaker 1: The irony is that it never worked out that way. 672 00:38:20,600 --> 00:38:23,279 Speaker 1: Um when when they did it, and and it's not 673 00:38:23,320 --> 00:38:26,080 Speaker 1: gonna work out this time. This time. Super Tuesday was 674 00:38:26,120 --> 00:38:30,480 Speaker 1: an attempt by conservatives as a way to submit a 675 00:38:30,600 --> 00:38:33,399 Speaker 1: denservative alternative, and it was supposed to be Ted Cruiser's day, 676 00:38:33,480 --> 00:38:35,000 Speaker 1: and it's not coming right. Mike. I know you want 677 00:38:35,040 --> 00:38:36,840 Speaker 1: to get back to serious politics. But I got a 678 00:38:36,920 --> 00:38:40,040 Speaker 1: critically important question from Mr Todd. Are you using the 679 00:38:40,120 --> 00:38:43,839 Speaker 1: word liberal or progressive? Now there's a shift going. Oh 680 00:38:44,000 --> 00:38:47,880 Speaker 1: that's interesting. Look I I interchange it when I described 681 00:38:47,920 --> 00:38:50,600 Speaker 1: the left of the party. My feeling is I'm always 682 00:38:50,640 --> 00:38:52,839 Speaker 1: one of those I call people by what they want 683 00:38:52,840 --> 00:38:54,640 Speaker 1: to be called by. You know, if people want to 684 00:38:54,680 --> 00:38:56,719 Speaker 1: be called pro life and the abortion movement and pro 685 00:38:56,880 --> 00:38:59,320 Speaker 1: choice in the abortion movement, then calling pro life and 686 00:38:59,400 --> 00:39:01,239 Speaker 1: pro choice. And know there's this argument in tournal in 687 00:39:01,280 --> 00:39:03,799 Speaker 1: the communities old it's anti aborts and right active it's 688 00:39:03,800 --> 00:39:06,879 Speaker 1: it's grower Boordstion rights active. You know, look, if people 689 00:39:06,880 --> 00:39:08,799 Speaker 1: want to be called progressive instead of liberal, fine, if 690 00:39:08,840 --> 00:39:11,400 Speaker 1: you want to be called conservative instead of moderate, you 691 00:39:11,440 --> 00:39:14,239 Speaker 1: know that you call people what they want to be called. 692 00:39:14,280 --> 00:39:17,160 Speaker 1: And the left of the Democratic Party wants to be presive, okay, 693 00:39:18,040 --> 00:39:22,359 Speaker 1: and some people get mad if you don't call them progressive. Um, 694 00:39:22,880 --> 00:39:25,400 Speaker 1: let's talk about that side of the party. In the 695 00:39:25,480 --> 00:39:29,680 Speaker 1: race of the Super Tuesday race, how much obviously Bertie 696 00:39:29,719 --> 00:39:33,359 Speaker 1: Senter's gonna have the money to compete, but how much 697 00:39:33,440 --> 00:39:37,399 Speaker 1: competition is he actually going to? Well, actually, i'm I'm 698 00:39:38,000 --> 00:39:40,680 Speaker 1: he's he's got less money than I expected. He's been 699 00:39:40,719 --> 00:39:44,279 Speaker 1: out raising her, but he uh, he's spent more than 700 00:39:44,360 --> 00:39:46,880 Speaker 1: I We went through more money than he should have 701 00:39:46,960 --> 00:39:49,560 Speaker 1: been January. He burned through a lot of cash. Um, 702 00:39:49,680 --> 00:39:51,640 Speaker 1: that's money that right now could be spent making a 703 00:39:51,760 --> 00:39:55,280 Speaker 1: Virginia or Texas more competitive. And this is the mistake 704 00:39:55,360 --> 00:39:57,359 Speaker 1: that I think he's made. He's not playing to win 705 00:39:57,760 --> 00:40:01,920 Speaker 1: on Super Tuesday. He's just playing to accumulate the delegates. 706 00:40:02,040 --> 00:40:04,040 Speaker 1: And that's fine. He's going to be able accumulate for 707 00:40:04,520 --> 00:40:07,239 Speaker 1: the delegates, and that's not a bad that's not a 708 00:40:07,280 --> 00:40:09,960 Speaker 1: bad showing if you think about where Bernie Sanders was 709 00:40:10,080 --> 00:40:12,480 Speaker 1: nine months ago. But if you're playing to win the nomination, 710 00:40:12,920 --> 00:40:14,279 Speaker 1: you're gonna have to beat her in a place like 711 00:40:14,400 --> 00:40:17,520 Speaker 1: Texas or Virginia or Tennessee or George of the four 712 00:40:17,560 --> 00:40:22,960 Speaker 1: biggest states before you know. And I would argue that Tennessee, Virginia, Texas, look, 713 00:40:23,000 --> 00:40:26,640 Speaker 1: none of them demographically are ideal for Sanders, but those 714 00:40:26,760 --> 00:40:32,239 Speaker 1: three have African American electors that are under So it's 715 00:40:33,080 --> 00:40:35,320 Speaker 1: it's something that he should be making a more of 716 00:40:35,360 --> 00:40:38,040 Speaker 1: an effort to do, and he's not. Yeah, I've heard 717 00:40:38,080 --> 00:40:41,200 Speaker 1: the Sanders campaign say, well, Michigan is where we can 718 00:40:41,280 --> 00:40:43,680 Speaker 1: really do well a week later, because by then that's 719 00:40:43,719 --> 00:40:48,640 Speaker 1: thirteen states late, and under the rules of the Democratic Party, 720 00:40:48,840 --> 00:40:52,960 Speaker 1: especially with the superdelegates already in Hillary's camp, then it 721 00:40:53,040 --> 00:40:57,680 Speaker 1: becomes impossible math almost well, forget, let's just set the 722 00:40:57,719 --> 00:41:01,960 Speaker 1: superdelegates aside. She's gonna build the lead without superdelegates and 723 00:41:02,040 --> 00:41:04,880 Speaker 1: then the superdelegates of the eight and that's that's that's, 724 00:41:04,920 --> 00:41:07,759 Speaker 1: of course, the only way really did to use the superdelegates. 725 00:41:07,840 --> 00:41:11,480 Speaker 1: You can't superdelegates start aren't gonna stick with you if 726 00:41:11,480 --> 00:41:16,279 Speaker 1: you're out winning. But uh, she's she's gonna build a 727 00:41:16,600 --> 00:41:19,600 Speaker 1: small but durable lead within the next ten days and 728 00:41:19,880 --> 00:41:23,040 Speaker 1: and he won't get with Catcher Chuck Hudd, Thank you 729 00:41:23,160 --> 00:41:28,640 Speaker 1: very much. We'll check interest. It will be super Tuesday. Um, 730 00:41:29,440 --> 00:41:31,520 Speaker 1: that's gonna be fascinating. It's gonna be a very interesting 731 00:41:31,600 --> 00:41:34,600 Speaker 1: day because it could go a very long way to 732 00:41:34,719 --> 00:41:38,600 Speaker 1: determining how this whole race plays out. Mike, what do 733 00:41:38,719 --> 00:41:46,359 Speaker 1: we make of the Japanese yen one eleven nine? Um, yeah, well, 734 00:41:46,360 --> 00:41:48,719 Speaker 1: it's our a gamy monetary policy. I thought it was. 735 00:41:48,800 --> 00:41:50,680 Speaker 1: I don't want to make of it. I thought it 736 00:41:50,800 --> 00:41:54,200 Speaker 1: was interesting earlier today when you were talking about the 737 00:41:54,239 --> 00:41:59,399 Speaker 1: possibility of of parity, and yeah, that that it would 738 00:41:59,440 --> 00:42:04,399 Speaker 1: be certainly the worst nightmare for abeomics. But we heard 739 00:42:04,440 --> 00:42:08,280 Speaker 1: from Corota, the central bankunter corotas on over the overnight 740 00:42:08,680 --> 00:42:11,880 Speaker 1: suggesting that maybe monetary policy can't do it all, or 741 00:42:11,920 --> 00:42:14,160 Speaker 1: at least que can't do it all, and they may 742 00:42:14,280 --> 00:42:17,880 Speaker 1: go even more negative, use interest rates to try to 743 00:42:18,239 --> 00:42:23,080 Speaker 1: get some movement there. Drop the at the end. There's 744 00:42:23,080 --> 00:42:25,319 Speaker 1: some really interesting nuances out there. Now. I don't want 745 00:42:25,320 --> 00:42:28,160 Speaker 1: to get hysterical this morning because it's not that look, 746 00:42:28,880 --> 00:42:33,280 Speaker 1: but nevertheless that there's subtleties on the Bloomberg screen. Futures 747 00:42:33,320 --> 00:42:36,960 Speaker 1: negative three down, futures negative twelve, oil a churn and 748 00:42:37,160 --> 00:42:40,960 Speaker 1: flatten out all over the place this morning. Thirty an 749 00:42:41,080 --> 00:42:46,120 Speaker 1: American West Texas Intermediate Michael mckayon Tom Keane bonus another 750 00:42:46,239 --> 00:42:48,040 Speaker 1: hour of Bloomberg surveillance