1 00:00:03,320 --> 00:00:07,200 Speaker 1: This is Bloomberg Surveillance. I've been thinking the ten years 2 00:00:07,240 --> 00:00:08,920 Speaker 1: in a one and a half two and a half 3 00:00:08,960 --> 00:00:11,320 Speaker 1: trade dance, and that's where we've been, and I think 4 00:00:11,360 --> 00:00:13,160 Speaker 1: that's where we're going to stay. I think there's a 5 00:00:13,240 --> 00:00:16,479 Speaker 1: growing sentiment that maybe negative rates are at all that 6 00:00:16,600 --> 00:00:19,000 Speaker 1: they were supposed to be in terms of stimulating growth 7 00:00:19,000 --> 00:00:21,760 Speaker 1: and inflation. Of precondition for a bear market is not 8 00:00:21,880 --> 00:00:25,799 Speaker 1: necessarily session. Bear markets can occur even at the US 9 00:00:25,920 --> 00:00:29,560 Speaker 1: failed to fall to recession. Bloomberg Surveillance, You're linked to 10 00:00:29,600 --> 00:00:33,920 Speaker 1: the world of economics, finance, and investment on Bloomberg Radio. 11 00:00:34,040 --> 00:00:38,320 Speaker 1: Good morning everyone, Michael McKee and Tom Kane, Bloomberg Surveillance Worldwide. 12 00:00:38,320 --> 00:00:41,920 Speaker 1: Good morning, United Kingdom. We're gonna touch on Brexit, which 13 00:00:41,920 --> 00:00:43,599 Speaker 1: has moved all the way to a debate of some 14 00:00:43,720 --> 00:00:46,839 Speaker 1: type in Shanghai at the G twenty meetings as well. 15 00:00:46,920 --> 00:00:48,640 Speaker 1: Jamie Murray to join us here in a moment from 16 00:00:48,680 --> 00:00:52,680 Speaker 1: Bloomberg Economics and Bloomberg Intelligence. Futures of eight now, futures 17 00:00:52,720 --> 00:00:57,160 Speaker 1: up seventy three record low yield, and the German five year, 18 00:00:57,840 --> 00:01:00,480 Speaker 1: the two years, the three digits. What we do yields 19 00:01:00,480 --> 00:01:03,200 Speaker 1: to three or four digits when it matters the German 20 00:01:03,240 --> 00:01:08,640 Speaker 1: two year negative zero point five five one, that's really 21 00:01:08,680 --> 00:01:11,120 Speaker 1: close to a record law. I don't believe we're there, 22 00:01:11,160 --> 00:01:15,360 Speaker 1: but we're getting maybe Michael mckie's wisdom on that Bloomberg 23 00:01:15,400 --> 00:01:19,880 Speaker 1: surveillance brought to by Cone Residuc Accounting Tax Advisory. To 24 00:01:19,959 --> 00:01:23,120 Speaker 1: keep your business on top of issues in the evolving 25 00:01:23,160 --> 00:01:28,360 Speaker 1: renewable energy market, it takes dedicated industry experts like Cone Residuc. 26 00:01:28,800 --> 00:01:32,039 Speaker 1: Find out more at Cone residuc dot com. We thank 27 00:01:32,080 --> 00:01:35,040 Speaker 1: Cone Residuck for their a support. Mike, I'm doing my 28 00:01:35,120 --> 00:01:39,160 Speaker 1: taxes this weekend. The incense came in from Amazon. You know, 29 00:01:40,040 --> 00:01:41,800 Speaker 1: fill the room with incense. You see what we can 30 00:01:41,840 --> 00:01:46,240 Speaker 1: do on some SPA music and yeah, exactly, we're gonna 31 00:01:46,280 --> 00:01:48,560 Speaker 1: release your tax returns to the public. Yes, what is 32 00:01:48,600 --> 00:01:50,920 Speaker 1: the story on that Mr? Trump is not? Is it? 33 00:01:51,600 --> 00:01:54,280 Speaker 1: He's so far making excuses for doing it. It came 34 00:01:54,400 --> 00:01:57,120 Speaker 1: Mitt Romney, of all people, brought brought it up as 35 00:01:57,200 --> 00:02:00,360 Speaker 1: something that m he is. Does he have tour or 36 00:02:00,400 --> 00:02:04,280 Speaker 1: is it? It doesn't have to but Romney suggested there 37 00:02:04,360 --> 00:02:07,240 Speaker 1: might be something hidden in there, like much lower income 38 00:02:07,280 --> 00:02:12,960 Speaker 1: than Mr Trump claims. Okay, Jamie Murrays as we look 39 00:02:13,000 --> 00:02:17,040 Speaker 1: at global economics. He runs economics for so much a 40 00:02:17,080 --> 00:02:20,639 Speaker 1: Bloomberg economics and Bloomberg Intelligence. Jamie, I don't even know 41 00:02:20,680 --> 00:02:22,480 Speaker 1: where to start, but I guess we start with a 42 00:02:22,560 --> 00:02:26,920 Speaker 1: Brexast update. What will you listen for this weekend and 43 00:02:27,080 --> 00:02:30,440 Speaker 1: in the next week? In the UK rhetoric on an 44 00:02:30,480 --> 00:02:34,480 Speaker 1: exit from Europe, I think the thing to recognizes we're 45 00:02:34,560 --> 00:02:36,200 Speaker 1: quite a long way from a vote here. The vote 46 00:02:36,240 --> 00:02:38,160 Speaker 1: is going to be twenty three of June. There's gonna 47 00:02:38,160 --> 00:02:40,519 Speaker 1: be a lot of campaigning over the next SCO next 48 00:02:40,560 --> 00:02:42,960 Speaker 1: month or two um, so there's there's a long way 49 00:02:43,000 --> 00:02:44,840 Speaker 1: to run. So I wouldn't attach too much weight to 50 00:02:44,880 --> 00:02:48,160 Speaker 1: any particular comments and politicians just yeah, there's would say there's, there's, 51 00:02:48,200 --> 00:02:54,119 Speaker 1: there's any time. Well, what's the argument that the probe 52 00:02:54,680 --> 00:02:58,840 Speaker 1: EU side is going to make. Well, I think there's 53 00:02:58,880 --> 00:03:02,600 Speaker 1: a general feeling that the UK could could benefit from 54 00:03:02,639 --> 00:03:06,000 Speaker 1: being outside the Union from trade ties and the reduction 55 00:03:06,040 --> 00:03:09,639 Speaker 1: in the burden of regulation from from Europe. I think 56 00:03:09,680 --> 00:03:12,680 Speaker 1: that the trouble with those arguments is that there's no 57 00:03:12,800 --> 00:03:15,360 Speaker 1: guarantees that if Britain leaves, it will be able to 58 00:03:15,400 --> 00:03:18,520 Speaker 1: make up for the beneficial trade tieser has with the EU, 59 00:03:18,919 --> 00:03:21,720 Speaker 1: and it's not clear that the legislation that is inflicted 60 00:03:21,720 --> 00:03:25,399 Speaker 1: on the UK by a europe is actually that unpalatable. Um. So, 61 00:03:25,520 --> 00:03:28,000 Speaker 1: I mean it's it's kind of the cases it's hard 62 00:03:28,040 --> 00:03:31,280 Speaker 1: to make in our view, the harder to make a 63 00:03:31,360 --> 00:03:35,240 Speaker 1: case for leaving. Yeah, it's it's it's harder to the 64 00:03:35,560 --> 00:03:38,720 Speaker 1: downside risks. It is kind of a leap into unknown 65 00:03:38,720 --> 00:03:42,360 Speaker 1: as as politicians say, the downside risks are probably bigger 66 00:03:42,360 --> 00:03:45,640 Speaker 1: than the upside risks are. And you've also propounding, like 67 00:03:45,720 --> 00:03:48,800 Speaker 1: the longer term view, you've got this this possibility that 68 00:03:48,840 --> 00:03:51,320 Speaker 1: there's gonna be some significant short term disruption. I mean, 69 00:03:51,320 --> 00:03:54,280 Speaker 1: we've done some modeling and we've run some shocks through 70 00:03:54,320 --> 00:03:56,840 Speaker 1: our through our models, we don't know a temper tent 71 00:03:56,920 --> 00:03:59,640 Speaker 1: exchange rate shop. We've done a hundred basis points on 72 00:03:59,680 --> 00:04:02,720 Speaker 1: into lending at a confidence shock to demand, so people 73 00:04:02,720 --> 00:04:05,520 Speaker 1: feeling less comfortable, spending less and we think that could 74 00:04:05,560 --> 00:04:08,360 Speaker 1: push inflation up significantly. We think growth to be far 75 00:04:08,440 --> 00:04:10,680 Speaker 1: slower in the near term, and we think the next 76 00:04:10,920 --> 00:04:13,840 Speaker 1: move to interest rates would be a cut to zero 77 00:04:14,240 --> 00:04:17,680 Speaker 1: if the Britain left Union. The economist a couple of 78 00:04:17,720 --> 00:04:19,919 Speaker 1: days ago, Jimmy, I assume you saw it made a 79 00:04:19,960 --> 00:04:23,760 Speaker 1: splash and trying to calculate the class in and out 80 00:04:23,800 --> 00:04:26,919 Speaker 1: of Brexit. Do you have all your good research. Do 81 00:04:27,040 --> 00:04:31,719 Speaker 1: you have a number that that London and the United 82 00:04:31,800 --> 00:04:36,320 Speaker 1: Kingdom gains or loses off of the transaction of leaving 83 00:04:36,320 --> 00:04:39,520 Speaker 1: the EU. We have, we have some numbers. So we've 84 00:04:39,520 --> 00:04:42,400 Speaker 1: got that short term impact, which which is temporary, that 85 00:04:42,400 --> 00:04:45,480 Speaker 1: wouldn't that wouldn't last forever. But the medium term impact 86 00:04:45,560 --> 00:04:49,280 Speaker 1: we think would be relatively large. So um, it's unclear 87 00:04:49,320 --> 00:04:52,400 Speaker 1: exactly what post Brexity arrangements would look like, but assuming 88 00:04:52,440 --> 00:04:55,920 Speaker 1: that the government is able to clamp down a migration flows, 89 00:04:56,320 --> 00:04:58,599 Speaker 1: that would make the economy smaller abou about one percent 90 00:04:58,680 --> 00:05:02,479 Speaker 1: by tw If the trade arrangements we have with the 91 00:05:02,600 --> 00:05:06,520 Speaker 1: you aren't replicated or made better by leaving, then you're 92 00:05:06,560 --> 00:05:08,640 Speaker 1: looking at another two percent of g d P. So 93 00:05:08,720 --> 00:05:11,560 Speaker 1: the economy could be three percent of GDP smaller in 94 00:05:11,600 --> 00:05:17,240 Speaker 1: the medium term, not per year, but just just over overall. Yes, 95 00:05:17,279 --> 00:05:20,200 Speaker 1: so the economy economic output per year would be lower 96 00:05:20,200 --> 00:05:23,039 Speaker 1: by three for the rest of time relative to what 97 00:05:23,040 --> 00:05:29,520 Speaker 1: it would otherwise have been. What about the impact internally 98 00:05:30,120 --> 00:05:33,760 Speaker 1: within Great Britain they lose some of the trade aspects, 99 00:05:33,839 --> 00:05:36,880 Speaker 1: but how much of the economy is dependent on that 100 00:05:36,960 --> 00:05:41,600 Speaker 1: would people be better off in terms of the companies 101 00:05:41,640 --> 00:05:46,200 Speaker 1: that would no longer be under the control of Brussels 102 00:05:46,200 --> 00:05:50,200 Speaker 1: in terms of the rules and regulations for the account 103 00:05:51,000 --> 00:05:53,640 Speaker 1: I mean, it's it's hard to think of specific examples 104 00:05:53,720 --> 00:05:58,640 Speaker 1: where interfering from Europe really produces negative outcomes for British business. 105 00:05:59,160 --> 00:06:02,320 Speaker 1: Things like the Working Time Directive, for example, which prevent 106 00:06:02,480 --> 00:06:05,000 Speaker 1: British workers from working more than I think as about 107 00:06:05,000 --> 00:06:07,839 Speaker 1: thirty eight hours a week. Um those things are generally 108 00:06:07,839 --> 00:06:11,000 Speaker 1: thought to be good both by workers and by by businesses, 109 00:06:11,400 --> 00:06:14,480 Speaker 1: and that's probably one of the bigger intrusions into British 110 00:06:14,480 --> 00:06:17,520 Speaker 1: life and the UM. So my my feeling is that 111 00:06:17,600 --> 00:06:22,000 Speaker 1: the leaving, leaving that regulation behind isn't really in a solution. 112 00:06:22,120 --> 00:06:25,000 Speaker 1: And if you think about the said the banking sector, 113 00:06:25,040 --> 00:06:28,680 Speaker 1: for example, leaving the EU is very unlikely to prompt 114 00:06:28,720 --> 00:06:32,080 Speaker 1: a big relaxation of rules on banks in the UK. 115 00:06:32,160 --> 00:06:34,200 Speaker 1: It's not like there's some sort of sunny upland for 116 00:06:34,320 --> 00:06:37,360 Speaker 1: British banks where they're no longer have to be regulated 117 00:06:37,400 --> 00:06:39,600 Speaker 1: at all. The Bank of England is just as as 118 00:06:39,600 --> 00:06:42,800 Speaker 1: tighter regulation, it's more higher than Europe. So so what 119 00:06:42,880 --> 00:06:45,960 Speaker 1: are the benefits to leaving the EU? You've cited a 120 00:06:45,960 --> 00:06:50,000 Speaker 1: lot of benefits or analysis to suggest there are benefits 121 00:06:50,520 --> 00:06:54,880 Speaker 1: to staying within this experiment. What's the upside for leaving? 122 00:06:56,080 --> 00:06:59,720 Speaker 1: The upside to leaving is that some hope that trade 123 00:06:59,760 --> 00:07:01,960 Speaker 1: follow those with the rest of the world that's expanding 124 00:07:02,040 --> 00:07:05,159 Speaker 1: quite far, like China. The emerging market would be bigger 125 00:07:05,200 --> 00:07:08,279 Speaker 1: because we could negotiate bilateral trade agreements with them that 126 00:07:08,360 --> 00:07:11,040 Speaker 1: we cannot do dependently of the EU. And I think 127 00:07:11,080 --> 00:07:16,040 Speaker 1: that's the biggest economic sort of benefit to the to 128 00:07:16,120 --> 00:07:18,720 Speaker 1: the UK. Those who are worried about the level of 129 00:07:18,760 --> 00:07:22,640 Speaker 1: migration for non economic reasons for them, that too could 130 00:07:22,640 --> 00:07:25,600 Speaker 1: be a benefit. So people seeing a lower migration as 131 00:07:25,600 --> 00:07:28,440 Speaker 1: a result of the leaving unfascinated. I'm asked one to 132 00:07:28,480 --> 00:07:33,640 Speaker 1: inform folks and Jamie's good answer, which didn't mention Scotland. 133 00:07:34,160 --> 00:07:36,600 Speaker 1: How do you know? And I understand you're not doing 134 00:07:36,600 --> 00:07:39,920 Speaker 1: this from a political angle, but do you just presume 135 00:07:40,240 --> 00:07:43,920 Speaker 1: that if Brexit occurs that's the real issue is a 136 00:07:44,000 --> 00:07:48,680 Speaker 1: Scottish overly So I think the the I think leaving 137 00:07:48,840 --> 00:07:53,400 Speaker 1: would almost would almost certainly trigger another referendum in Scotland 138 00:07:53,400 --> 00:07:56,640 Speaker 1: on the membership of the Union the UK. UM when 139 00:07:56,640 --> 00:07:58,240 Speaker 1: that would happen, I think it probably a year or 140 00:07:58,280 --> 00:08:02,000 Speaker 1: two once the all the negotiating the complete, because you 141 00:08:02,040 --> 00:08:03,720 Speaker 1: really need to know what's gonna be in placed afterwards 142 00:08:03,760 --> 00:08:06,080 Speaker 1: before Scotland can make a decision about the about its 143 00:08:06,080 --> 00:08:08,040 Speaker 1: own membership of the UK. So I think that's that 144 00:08:08,040 --> 00:08:09,480 Speaker 1: would be quite a long way off. But yes, it 145 00:08:09,520 --> 00:08:12,280 Speaker 1: would be a risk, and we know we know what 146 00:08:12,360 --> 00:08:16,400 Speaker 1: the consequences of breaking in the UK are already. Well, 147 00:08:17,040 --> 00:08:20,520 Speaker 1: we were just talking with a couple of guests who said, yes, 148 00:08:20,960 --> 00:08:26,800 Speaker 1: the STRA and Mr Cameron got concessions from the EU, 149 00:08:27,040 --> 00:08:29,640 Speaker 1: but they're hard to explain. Can you put into words 150 00:08:29,720 --> 00:08:31,880 Speaker 1: for us what they're going to try to sell out 151 00:08:31,880 --> 00:08:36,920 Speaker 1: of the deal? Well, so the only UM. So we've 152 00:08:36,960 --> 00:08:39,040 Speaker 1: got a few two things, some sort of more political 153 00:08:39,160 --> 00:08:41,720 Speaker 1: to others more sort of policy economic. One of the 154 00:08:41,800 --> 00:08:43,880 Speaker 1: one of the concessions was that there were no longer 155 00:08:43,960 --> 00:08:46,480 Speaker 1: going to be subject to the ever closer union part 156 00:08:46,559 --> 00:08:49,599 Speaker 1: of the agreement with the UM. What that means is 157 00:08:49,640 --> 00:08:53,080 Speaker 1: kind of fuzzy. Who knows whether the degree to which 158 00:08:53,080 --> 00:08:55,800 Speaker 1: the opinion was going closer anyway. It's it's hard to 159 00:08:56,200 --> 00:08:58,400 Speaker 1: it's hard to sell that, but he will highlight it 160 00:08:58,480 --> 00:09:00,920 Speaker 1: is as something he's brought home. UM. And the other 161 00:09:00,960 --> 00:09:05,000 Speaker 1: one is a changes to benefits. So he's managed to 162 00:09:05,000 --> 00:09:08,280 Speaker 1: secure a break on the payment of in work benefits 163 00:09:08,360 --> 00:09:12,439 Speaker 1: that UM credits you get for basically pay lower taxes 164 00:09:12,800 --> 00:09:16,800 Speaker 1: UM because you are working lower a pun a few 165 00:09:16,800 --> 00:09:20,080 Speaker 1: hours a week UM. That benefit that that in work 166 00:09:20,160 --> 00:09:24,160 Speaker 1: benefit would no longer be payable to recent migrants. UH. 167 00:09:24,160 --> 00:09:27,440 Speaker 1: And the idea is that dissuas him from coming. The 168 00:09:27,480 --> 00:09:30,199 Speaker 1: trouble is that it probably won't because most people come 169 00:09:30,200 --> 00:09:33,160 Speaker 1: here to work anyway. The the income differential was very 170 00:09:33,240 --> 00:09:35,959 Speaker 1: wide already and even if you make these tweets to 171 00:09:36,040 --> 00:09:39,400 Speaker 1: the so the payment of benefits, the incentive to come 172 00:09:39,440 --> 00:09:42,480 Speaker 1: to Britain is still quite strong. UM. So my guess 173 00:09:42,520 --> 00:09:45,120 Speaker 1: is that it wouldn't have an enormous influence on migration, 174 00:09:45,160 --> 00:09:48,240 Speaker 1: which is what it is intended to address. Jamie, thank 175 00:09:48,280 --> 00:09:52,360 Speaker 1: you so much. Jamie Murray is a Bloomberg intelligence in 176 00:09:52,400 --> 00:09:56,360 Speaker 1: Bloomberg Economics this morning. A good briefing there, and Brexit 177 00:09:56,840 --> 00:09:58,920 Speaker 1: is Jamie started at the beginning, it's it's out there 178 00:09:58,960 --> 00:10:01,679 Speaker 1: in June. But I thought it was really a nuanced 179 00:10:01,679 --> 00:10:05,560 Speaker 1: week of Brexit debate. I was really taken back somewhere 180 00:10:05,559 --> 00:10:08,079 Speaker 1: I saw this morning. I'm sorry, folks, I can't site 181 00:10:08,120 --> 00:10:12,560 Speaker 1: it of of a real interest in having somehow Brexit 182 00:10:12,679 --> 00:10:17,880 Speaker 1: creep into the communication in Shanghai. I find that almost unimaginable. Yeah, 183 00:10:18,080 --> 00:10:20,640 Speaker 1: maybe a little early for that, yeah kind of thing. 184 00:10:20,679 --> 00:10:23,160 Speaker 1: I don't know that they would get involved in exact 185 00:10:23,320 --> 00:10:27,120 Speaker 1: using sides. Yeah, but it is going to be a 186 00:10:27,160 --> 00:10:30,160 Speaker 1: fascinating couple of months with Brexit, with China, with oil, 187 00:10:30,240 --> 00:10:34,880 Speaker 1: with the elections, UM, lots of lots of the G 188 00:10:35,040 --> 00:10:38,320 Speaker 1: twenty to keep their eyes on. Yeah, absolutely, a currency 189 00:10:38,400 --> 00:10:45,400 Speaker 1: markets Yeah, nearer one seven fractually stronger again this morning, 190 00:10:45,800 --> 00:10:55,199 Speaker 1: sterling one. Now let's talk to John Tucker and get 191 00:10:55,240 --> 00:10:58,600 Speaker 1: the latest world in national headlines. John, Tom and Mine 192 00:10:58,720 --> 00:11:02,000 Speaker 1: the Republican presidential can that it's going their separate ways today. 193 00:11:02,080 --> 00:11:05,439 Speaker 1: After a knockdown, drag out debate that featured name calling, insults, 194 00:11:05,640 --> 00:11:08,880 Speaker 1: and finger pointing, US military expanding the war in Islamic 195 00:11:08,960 --> 00:11:11,960 Speaker 1: State group with an assault on the internet. US officials 196 00:11:12,000 --> 00:11:15,200 Speaker 1: say the newly launched aggressive campaign of cyber attacks targets 197 00:11:15,200 --> 00:11:18,200 Speaker 1: the group's abilities to use social media and the Internet. 198 00:11:18,640 --> 00:11:21,400 Speaker 1: President Obama heads to Florida today defending the results of 199 00:11:21,440 --> 00:11:24,480 Speaker 1: the massive economic stimulant bill he signed early in his 200 00:11:24,720 --> 00:11:28,320 Speaker 1: first term, and to keep prices stable and to avoid 201 00:11:28,520 --> 00:11:32,239 Speaker 1: a glutt the cartel is keeping a lid on production 202 00:11:32,559 --> 00:11:36,679 Speaker 1: OPEC and oil No maple syrup. The Federation of Quebec 203 00:11:36,720 --> 00:11:41,120 Speaker 1: maple syrup Producers accounts for seventy world supply. They are 204 00:11:41,200 --> 00:11:45,439 Speaker 1: strictly limiting how much can be extracted and sold this season. 205 00:11:45,800 --> 00:11:49,600 Speaker 1: Global News twenty four hours a day, power journalists in 206 00:11:49,679 --> 00:11:52,840 Speaker 1: more than one news bureaus around the world. John Tucker, 207 00:11:52,920 --> 00:11:56,200 Speaker 1: You've been a funt of news wisdom this week. Funt. 208 00:11:56,880 --> 00:11:59,719 Speaker 1: I think there are different grades as well, like oil 209 00:12:00,080 --> 00:12:03,760 Speaker 1: syrup Okay, very good on the maple syrup. Watch Bloomberg Surveillance. 210 00:12:06,640 --> 00:12:08,600 Speaker 1: The news update brought to by your Mercedes Benz Tri 211 00:12:08,640 --> 00:12:10,679 Speaker 1: State Dealer. When it comes to winter elements, put your 212 00:12:10,760 --> 00:12:14,000 Speaker 1: first four wheels forward with Mercedes Benz Formatic all wheel Drive. 213 00:12:14,200 --> 00:12:16,480 Speaker 1: Visit your Mercedes Benz Tri State Dealer for a test 214 00:12:16,559 --> 00:12:24,959 Speaker 1: drive today. Global Business News twenty four hours a day, 215 00:12:25,160 --> 00:12:28,360 Speaker 1: IF Bloomberg dot Com, the Radio plus Mobilat and on 216 00:12:28,400 --> 00:12:32,360 Speaker 1: your radio. This is a Bloomberg Business Flash and I'm 217 00:12:32,400 --> 00:12:35,880 Speaker 1: Karen Moscow. US Dock Index futures are rising this morning. 218 00:12:35,920 --> 00:12:37,880 Speaker 1: Let's go to the First Word Breaking news desk for 219 00:12:37,920 --> 00:12:41,000 Speaker 1: today's morning call, and here's Bill Maloney. Good morning, Bill, 220 00:12:41,440 --> 00:12:44,520 Speaker 1: Good morning Karen. US futures have paired some of their 221 00:12:44,520 --> 00:12:47,280 Speaker 1: games since the last time we spoke. Doubt futures currently 222 00:12:47,360 --> 00:12:50,320 Speaker 1: hired by seventy nine points SPS game nine and as 223 00:12:50,320 --> 00:12:53,320 Speaker 1: the futures rise by twenty six. At one point, dout 224 00:12:53,320 --> 00:12:56,079 Speaker 1: futures were up a hundred and forty eight points up 225 00:12:56,160 --> 00:12:58,720 Speaker 1: and markets have also paired their games. Germany is now 226 00:12:58,760 --> 00:13:01,480 Speaker 1: training higher by one point five per cent. On the 227 00:13:01,520 --> 00:13:04,679 Speaker 1: US economic front DIGHT thirty, GDP and Core pc E 228 00:13:05,120 --> 00:13:08,640 Speaker 1: and at ten o'clock personal income and Michigan sentiment after 229 00:13:08,679 --> 00:13:11,680 Speaker 1: the Bellos night gap, your just EPs view, trailed estimates, 230 00:13:11,920 --> 00:13:14,680 Speaker 1: Herbal Life set and talks with the FTC on potential 231 00:13:14,760 --> 00:13:18,520 Speaker 1: resolution into it, and Kraft Heinz, Bat and Monster Beverage 232 00:13:18,559 --> 00:13:22,760 Speaker 1: Q four revenue was below estimates regarding earnings Today Rowan 233 00:13:22,800 --> 00:13:25,360 Speaker 1: and south Aby's beat and foot Locker Q for just 234 00:13:25,480 --> 00:13:29,439 Speaker 1: EPs and comp sales beat estimates and other news Hilton 235 00:13:29,480 --> 00:13:32,240 Speaker 1: to spin off its real estate and time share businesses. 236 00:13:32,600 --> 00:13:35,640 Speaker 1: Following some of your key Wellshet upgrades and downgrades. Monster 237 00:13:35,679 --> 00:13:38,440 Speaker 1: Beverage raised by a c l s A Gold Corp 238 00:13:38,480 --> 00:13:41,480 Speaker 1: cut the cell at Deutsche Bank, Graft Hinds raised overweight 239 00:13:41,480 --> 00:13:44,520 Speaker 1: at JP Morgan Restoration Hardware raised a strong buy it 240 00:13:44,640 --> 00:13:48,400 Speaker 1: Raymond James, and finally Colgate Palmolv cut to neutral over 241 00:13:48,520 --> 00:13:51,360 Speaker 1: at stern A g Live from the first Breaking news 242 00:13:51,400 --> 00:13:54,679 Speaker 1: desk Im Bill Maloney, care alright, thanks billan to hear 243 00:13:54,720 --> 00:13:57,720 Speaker 1: live breaking news over here. Bloomberg type squawk ago on 244 00:13:57,760 --> 00:14:00,240 Speaker 1: your terminal, that's s Q you a w K go 245 00:14:00,440 --> 00:14:03,400 Speaker 1: and that's a Bloomberg business flash. Tom and Mike Karena, 246 00:14:03,640 --> 00:14:07,360 Speaker 1: thanks so much. Bloomberg Surveillance brought you by Investco. Factor 247 00:14:07,400 --> 00:14:12,679 Speaker 1: based strategies can help investors focus on high quality, low volatility, 248 00:14:12,840 --> 00:14:18,280 Speaker 1: and more. Learn more at investco dot com Slash High Conviction. 249 00:14:18,840 --> 00:14:21,640 Speaker 1: Michael McKee on air this morning because she couldn't get 250 00:14:21,640 --> 00:14:23,520 Speaker 1: out of bed, she says, up most of the night 251 00:14:23,920 --> 00:14:27,360 Speaker 1: partying over Chris ka Crieter's third period goal as the 252 00:14:27,480 --> 00:14:30,880 Speaker 1: Rangers beat the St. Louis Blues. We welcome scarlet flu 253 00:14:31,000 --> 00:14:33,480 Speaker 1: the ring the food. The Rangers are doing better, right, 254 00:14:33,640 --> 00:14:36,400 Speaker 1: They're doing better, but I'd like to see more consistency. 255 00:14:36,120 --> 00:14:38,280 Speaker 1: There are too many close games, and you know for 256 00:14:38,320 --> 00:14:40,320 Speaker 1: every two games they get ahead, there's one game where 257 00:14:40,320 --> 00:14:43,240 Speaker 1: they fall fall apart completely. Yeah. Absolutely. For those of 258 00:14:43,280 --> 00:14:46,160 Speaker 1: you worldwide Scarlet Food joining us, start stage and screen, 259 00:14:46,600 --> 00:14:49,120 Speaker 1: uh and really watch you. The Rangers do better than 260 00:14:49,160 --> 00:14:55,920 Speaker 1: good except against the outfront Washington Capitals. Christopher. Yes, Christopher 261 00:14:55,960 --> 00:15:00,000 Speaker 1: Rowland is with FBR looking at Apple, Christopher, good morning, 262 00:15:00,720 --> 00:15:04,240 Speaker 1: Good morning. I want to get through the litigation thing quickly. 263 00:15:04,280 --> 00:15:06,160 Speaker 1: It sort of bores me because I guess we're gonna go, 264 00:15:06,160 --> 00:15:09,960 Speaker 1: We're gonna go. The major question to me is is 265 00:15:10,000 --> 00:15:14,520 Speaker 1: there any immediate analysis of what the debate with the 266 00:15:14,600 --> 00:15:18,960 Speaker 1: government would do with Apple to their revenues, to their income, 267 00:15:19,080 --> 00:15:23,040 Speaker 1: to their earnings, and to the share price. Yeah. So 268 00:15:23,800 --> 00:15:27,160 Speaker 1: there's nothing concrete that we can point to right now, 269 00:15:27,200 --> 00:15:32,040 Speaker 1: but I think the ram ramifications, particularly internationally, uh, could 270 00:15:32,040 --> 00:15:38,080 Speaker 1: be quite severe. Yeah. Sure. So if the if this 271 00:15:38,480 --> 00:15:41,600 Speaker 1: they care, if they decide to not vacate this court 272 00:15:41,760 --> 00:15:44,320 Speaker 1: order here, uh, and if they go ahead and they 273 00:15:44,360 --> 00:15:47,440 Speaker 1: put this back door in, what that does is it 274 00:15:47,520 --> 00:15:53,080 Speaker 1: allows other international governments to go to Apple and say, look, 275 00:15:53,120 --> 00:15:56,920 Speaker 1: you've already created this back door, now we want it. 276 00:15:57,400 --> 00:15:59,920 Speaker 1: So this could be you know, governments from Saudi or 277 00:16:00,040 --> 00:16:02,800 Speaker 1: a Bia, or this could be governments from China, and 278 00:16:02,880 --> 00:16:06,880 Speaker 1: of course there's information or dissidents and in these countries. Uh. 279 00:16:07,080 --> 00:16:10,320 Speaker 1: And it's incredibly, incredibly dangerous. It's not a step that 280 00:16:10,400 --> 00:16:14,640 Speaker 1: Apple would take. So they could potentially block the sale 281 00:16:15,080 --> 00:16:19,040 Speaker 1: of products h unless this back door is given to 282 00:16:19,160 --> 00:16:21,440 Speaker 1: each and every government, And that's not a step that 283 00:16:21,480 --> 00:16:24,440 Speaker 1: Apple would be willing to take. So Tim Cook's posturing 284 00:16:24,520 --> 00:16:28,480 Speaker 1: is more because of what it represents to other foreign government's, 285 00:16:28,520 --> 00:16:31,280 Speaker 1: other foreign markets. I think this is one sort of 286 00:16:31,360 --> 00:16:36,320 Speaker 1: knock on effect that I think is most financially detrimental 287 00:16:36,960 --> 00:16:40,560 Speaker 1: um as opposed to just a privacy act. Yes, within 288 00:16:40,600 --> 00:16:42,760 Speaker 1: the financials in the time that we've got left to you, 289 00:16:42,760 --> 00:16:44,600 Speaker 1: and we'll have you on for a longer. About here 290 00:16:44,600 --> 00:16:47,720 Speaker 1: in a bit with the new earnings report, do you 291 00:16:47,800 --> 00:16:50,800 Speaker 1: just presume that there will be the ginormous mother of 292 00:16:50,840 --> 00:16:56,840 Speaker 1: all share buy back, dividend increase announcements. Uh, It's it's 293 00:16:56,880 --> 00:17:00,520 Speaker 1: not clear yet. It really is not clear yet. Apples 294 00:17:00,560 --> 00:17:05,399 Speaker 1: having uh some some challenges in terms of growth. I 295 00:17:05,440 --> 00:17:08,320 Speaker 1: think that that that there maybe now more than ever, 296 00:17:08,840 --> 00:17:11,640 Speaker 1: they want to keep a little bit of dry powder 297 00:17:11,720 --> 00:17:16,040 Speaker 1: here to perhaps to move into other markets. So. Um, 298 00:17:16,080 --> 00:17:21,320 Speaker 1: so it's not clear exactly what they're going I I 299 00:17:21,320 --> 00:17:24,480 Speaker 1: don't think Twitter would be, uh, the number one goal 300 00:17:24,560 --> 00:17:29,159 Speaker 1: for them. Now, you know, there is some discussion about 301 00:17:29,359 --> 00:17:33,040 Speaker 1: something to do in autos. Uh, that could be a 302 00:17:33,080 --> 00:17:37,280 Speaker 1: potential area of focus for them. Um, you know, moving 303 00:17:37,320 --> 00:17:41,360 Speaker 1: beyond just consumer electronics, so you're talking more about services 304 00:17:41,480 --> 00:17:44,360 Speaker 1: and that recurring revenue aspect, which has kind of alluded 305 00:17:44,359 --> 00:17:49,720 Speaker 1: them and has contributed to the discount on their evaluation. Absolutely. Yeah. 306 00:17:49,760 --> 00:17:52,600 Speaker 1: So this being the case, Tim Cook is fighting this 307 00:17:52,640 --> 00:17:56,480 Speaker 1: pr war. On the one hand, what is his operational 308 00:17:56,480 --> 00:17:58,760 Speaker 1: staff most obsessed with right now? What are they working 309 00:17:58,800 --> 00:18:00,920 Speaker 1: on that they must get done by the end of 310 00:18:00,920 --> 00:18:04,960 Speaker 1: the year. Yeah, so um, you know, the real problem 311 00:18:05,040 --> 00:18:08,960 Speaker 1: that Apple's running into right now is declining iPhone numbers 312 00:18:09,000 --> 00:18:13,359 Speaker 1: because the replacement rate or or or or time the 313 00:18:13,400 --> 00:18:15,439 Speaker 1: cycle that it takes for a consumer to buy a 314 00:18:15,520 --> 00:18:19,040 Speaker 1: phone is increasing. And in North America we've gone from 315 00:18:19,040 --> 00:18:21,600 Speaker 1: a little over two years to two and a half 316 00:18:21,640 --> 00:18:25,959 Speaker 1: and approaching three years. And this is really, really hurting 317 00:18:25,960 --> 00:18:29,200 Speaker 1: their growth rate. What they need to do is create 318 00:18:29,280 --> 00:18:33,760 Speaker 1: a significant amount of innovation in the iPhone seven that 319 00:18:33,800 --> 00:18:39,479 Speaker 1: will make this extending cycle actually contracts. When that happens, 320 00:18:39,520 --> 00:18:41,600 Speaker 1: you'll get growth again. And Tom, there's a lot of 321 00:18:41,600 --> 00:18:44,359 Speaker 1: talk that Apple in March typically releases new products and 322 00:18:44,359 --> 00:18:47,320 Speaker 1: there's supposed to be some midstized iPad. I guess that 323 00:18:47,359 --> 00:18:50,960 Speaker 1: means bigger than the mini iPad, smaller than the regular iPad. Uh, 324 00:18:51,000 --> 00:18:55,399 Speaker 1: there's there is a iPad three coming. There's also Uh, 325 00:18:55,400 --> 00:18:59,800 Speaker 1: there's also a smaller iPhone as well. Within quickly here 326 00:18:59,800 --> 00:19:03,040 Speaker 1: with in the chit chat, do you see the new 327 00:19:03,119 --> 00:19:11,639 Speaker 1: phone providing the unit growth necessary? That question is still 328 00:19:11,760 --> 00:19:14,800 Speaker 1: to be answered, and then I agree the answer the 329 00:19:14,880 --> 00:19:18,480 Speaker 1: answer lies in the level of innovation and the new 330 00:19:18,560 --> 00:19:21,080 Speaker 1: features that are coming, and we only know of a 331 00:19:21,119 --> 00:19:23,480 Speaker 1: few of them thus far. I agree there's a mystery 332 00:19:23,520 --> 00:19:26,359 Speaker 1: to it, and this, of course is UH. Most shops 333 00:19:26,440 --> 00:19:30,800 Speaker 1: maintain huge optimism FBR with an outperform and a hundred 334 00:19:31,560 --> 00:19:34,440 Speaker 1: price target on Apple. Christopher rolling with us will have 335 00:19:34,520 --> 00:19:37,520 Speaker 1: them back for a more extended discussion here. Somehow, I 336 00:19:37,520 --> 00:19:41,000 Speaker 1: think we'll be doing this. Scarlet. I got a film 337 00:19:41,400 --> 00:19:45,159 Speaker 1: a photo from a family member on the fancy new phone. 338 00:19:45,640 --> 00:19:50,439 Speaker 1: That was shocking. How much better better? Oh that's unreal, 339 00:19:50,880 --> 00:19:57,399 Speaker 1: unreal like cabbage, Scarlet food with us. This is Spurler Survey. 340 00:19:57,560 --> 00:20:01,000 Speaker 1: I can't even talk on It's Scarlett Foo is here. 341 00:20:01,440 --> 00:20:07,760 Speaker 1: Stay with us, coming up on the With all due respect, 342 00:20:07,840 --> 00:20:09,639 Speaker 1: highlight brought to you by land Rover. If it's in 343 00:20:09,640 --> 00:20:12,000 Speaker 1: your nature to cast off the every day and seek adventure, 344 00:20:12,040 --> 00:20:14,800 Speaker 1: the Discovery Sport was built to help your search. Visit 345 00:20:14,920 --> 00:20:17,240 Speaker 1: land Rover tri sat dot com for special offers during 346 00:20:17,240 --> 00:20:19,919 Speaker 1: the only Adventure Sales event. Land Rover Above and Beyond 347 00:20:23,240 --> 00:20:27,560 Speaker 1: broadcasting live to New York, Kioolberg eleventh, Rio to Washington, 348 00:20:27,640 --> 00:20:31,680 Speaker 1: d C, Bloomberg to Boston, Bloomberg twelve on It to 349 00:20:31,840 --> 00:20:35,920 Speaker 1: San Francisco, Bloomberg nine six to the country Serious XM 350 00:20:36,040 --> 00:20:39,480 Speaker 1: Channel one nine and around the globe the Bloomberg Radio 351 00:20:39,520 --> 00:20:45,400 Speaker 1: Plus Appen Bloomberg dot com. This is Bloomberg Surveillance. I'm 352 00:20:45,440 --> 00:20:48,040 Speaker 1: Scarlett Foo here at tom Keene. Economic indicators are brought 353 00:20:48,080 --> 00:20:50,679 Speaker 1: to you by Commonwealth Financial Network. When it's time to 354 00:20:50,760 --> 00:20:53,560 Speaker 1: change the conversation, talk with a broker dealer. Are aight 355 00:20:53,640 --> 00:20:56,480 Speaker 1: that's ready to listen? Call eight six six or six 356 00:20:56,480 --> 00:21:00,200 Speaker 1: to three six three eight, or visit Commonwealth dot com 357 00:21:00,240 --> 00:21:02,560 Speaker 1: to learn more. Let's check in now with Vinnie del 358 00:21:02,680 --> 00:21:06,840 Speaker 1: Judas for the latest economic indicators. Vinnie, good morning, Scarlett. 359 00:21:06,920 --> 00:21:10,439 Speaker 1: We have figures on GDP revised fourth quarter GDP stronger 360 00:21:10,480 --> 00:21:13,720 Speaker 1: than forecast an increase of one percent in the fourth quarter. 361 00:21:13,920 --> 00:21:17,160 Speaker 1: Going into the report, economists and anticipated a point four 362 00:21:17,200 --> 00:21:20,359 Speaker 1: percent increase the prior number. The prior estimate by the 363 00:21:20,400 --> 00:21:24,520 Speaker 1: government was point seven so GDP topping forecasts up one percent. 364 00:21:24,640 --> 00:21:28,600 Speaker 1: Also some advanced trade on merchandise trade deficite January at 365 00:21:28,640 --> 00:21:31,960 Speaker 1: widen the sixty two point two billion dollars from roughly 366 00:21:32,000 --> 00:21:35,080 Speaker 1: sixty one point five in December at the Bloomberk first 367 00:21:35,119 --> 00:21:37,960 Speaker 1: ward Desk company. Del Judas, let's go back to New York. Then, 368 00:21:38,000 --> 00:21:40,679 Speaker 1: he thanks so much. Markets move on his yields up 369 00:21:40,720 --> 00:21:44,240 Speaker 1: for totally risk on two year yield explodes up three 370 00:21:44,240 --> 00:21:47,520 Speaker 1: basis points point seven eight uh and with some cursed 371 00:21:47,520 --> 00:21:50,080 Speaker 1: steepening as well. We're not back out over a hundred beefs, 372 00:21:50,119 --> 00:21:54,240 Speaker 1: but certainly a constructive field that futures up twelve down, 373 00:21:54,280 --> 00:21:57,440 Speaker 1: futures up one of seven. Lindsay Diega and where this 374 00:21:57,640 --> 00:22:01,640 Speaker 1: stiffil Nicholas Lindsay, you gotta helped me here. All in all, 375 00:22:01,720 --> 00:22:05,280 Speaker 1: I think it's been a week a very good economic 376 00:22:05,600 --> 00:22:08,159 Speaker 1: data or at least flat or up. Feel like we 377 00:22:08,320 --> 00:22:15,200 Speaker 1: just see with statistic um. Does this sudjust the FED discussion, 378 00:22:15,280 --> 00:22:19,200 Speaker 1: not immediately but in the coming weeks. It really doesn't 379 00:22:19,280 --> 00:22:22,480 Speaker 1: change the storyline for the US economy, knowing that we've 380 00:22:22,520 --> 00:22:25,400 Speaker 1: now slowed for back to back quarters from that peak 381 00:22:25,400 --> 00:22:28,520 Speaker 1: of activity in the second quarter. But even a small 382 00:22:28,680 --> 00:22:34,240 Speaker 1: three tents upside revision does reinforce the that the economy 383 00:22:34,320 --> 00:22:37,880 Speaker 1: is still on moderate footing. And remember, against the backdrop 384 00:22:37,920 --> 00:22:41,440 Speaker 1: of stronger inflation data, as we heard from Esther George yesterday, 385 00:22:41,480 --> 00:22:43,800 Speaker 1: there's still a lot of pressure on the FED to 386 00:22:43,880 --> 00:22:47,480 Speaker 1: give us that second rate increase near term. Scarlett, what 387 00:22:47,560 --> 00:22:50,400 Speaker 1: I would suggest is Lindsay nails it with the word reinforce. 388 00:22:51,119 --> 00:22:53,840 Speaker 1: I think that just totally captures the week stone. We 389 00:22:53,840 --> 00:22:57,199 Speaker 1: should also mention that the consensus estimate here for GDP 390 00:22:57,520 --> 00:23:00,320 Speaker 1: was for four tents of one percent, so UH lower 391 00:23:00,600 --> 00:23:03,640 Speaker 1: piece of growth, and in getting that one percent advanced, 392 00:23:03,680 --> 00:23:06,320 Speaker 1: we not only defied expectations, but we built on the 393 00:23:06,359 --> 00:23:11,359 Speaker 1: original UH regional report, Tom Lindsey stated, a consumer here, 394 00:23:11,400 --> 00:23:14,600 Speaker 1: a little light personal consumption comes in, but still is 395 00:23:14,600 --> 00:23:18,880 Speaker 1: it lead us always by six of the economy. Yeah, 396 00:23:18,920 --> 00:23:21,760 Speaker 1: we see consumption revised down slightly from two point two 397 00:23:21,840 --> 00:23:24,720 Speaker 1: to two percent, But again we're really splitting hairs there. 398 00:23:24,760 --> 00:23:27,000 Speaker 1: We know the consumer began to tighten their purse strings 399 00:23:27,440 --> 00:23:29,480 Speaker 1: at the end of the year. The good news is 400 00:23:29,480 --> 00:23:32,120 Speaker 1: the retail data does seem to be a bit stronger 401 00:23:32,160 --> 00:23:34,600 Speaker 1: as we rounded out into the new year. But from 402 00:23:34,640 --> 00:23:38,280 Speaker 1: the sets point of view, again that this just solidifies 403 00:23:38,320 --> 00:23:41,080 Speaker 1: the idea that the consumer is still on moderate footing, 404 00:23:41,320 --> 00:23:44,240 Speaker 1: hopefully gaining momentum as we started seek improvement in that 405 00:23:44,240 --> 00:23:49,040 Speaker 1: wage component. And do your reinforcing discussion on reinforce reinforce 406 00:23:49,160 --> 00:23:51,800 Speaker 1: how many I mean, I hate the parlor game, folks, 407 00:23:51,800 --> 00:23:55,040 Speaker 1: but it actually works here. How many rate rises this year? 408 00:23:55,280 --> 00:23:58,639 Speaker 1: Are you migrating back to three or four? We have 409 00:23:58,760 --> 00:24:01,879 Speaker 1: not deviated. We're still looking for three rate increases. Because remember, 410 00:24:02,000 --> 00:24:04,560 Speaker 1: it's not about the lack of improvement that we've seen 411 00:24:04,560 --> 00:24:08,000 Speaker 1: in the data. It's about the FETT expectations, and the 412 00:24:08,080 --> 00:24:11,280 Speaker 1: data has not materially deteriorated, and so that has not 413 00:24:11,680 --> 00:24:16,159 Speaker 1: in our opinion, adjusted downwards the fees expectations for growth 414 00:24:16,200 --> 00:24:18,000 Speaker 1: two to three year hends. Remember, they want to get 415 00:24:18,000 --> 00:24:20,240 Speaker 1: out ahead of inflation, and so they're going to have 416 00:24:20,280 --> 00:24:23,800 Speaker 1: to begin to continue excuse me, continue to give us 417 00:24:23,880 --> 00:24:27,520 Speaker 1: gradual rate increases along the way. I'm really interested. Scarlett 418 00:24:27,600 --> 00:24:31,400 Speaker 1: in the Gloom Crew essays this weekend, how do they 419 00:24:31,480 --> 00:24:35,560 Speaker 1: write about gloom given the sum of data we've seen? 420 00:24:35,680 --> 00:24:38,040 Speaker 1: Well at this point, for instance, to this GDP report 421 00:24:38,040 --> 00:24:41,960 Speaker 1: which indicates that the fourth quarter UH faster than initially 422 00:24:42,040 --> 00:24:44,760 Speaker 1: estimated because of a higher value of business inventors. And 423 00:24:45,160 --> 00:24:47,280 Speaker 1: at the same time there are some point to wages 424 00:24:47,359 --> 00:24:49,920 Speaker 1: and salaries rising eighty three point three billion dollars, which 425 00:24:49,960 --> 00:24:53,080 Speaker 1: was revised down from the eighty nine point two billion 426 00:24:53,080 --> 00:24:56,040 Speaker 1: dollars initially reported. Well, how do you, lindsay, how do 427 00:24:56,080 --> 00:24:59,800 Speaker 1: you factor in export dynamics into why will see plus 428 00:24:59,800 --> 00:25:02,119 Speaker 1: i've plus G plus an X. I mean, do you 429 00:25:02,160 --> 00:25:05,439 Speaker 1: just forget about it or is that valid? No? It 430 00:25:05,480 --> 00:25:07,639 Speaker 1: certainly is valid. And one of the components that you 431 00:25:07,720 --> 00:25:10,600 Speaker 1: see it was a significant revision is imports. Now, of 432 00:25:10,600 --> 00:25:12,600 Speaker 1: course this will be a net positive to the GP 433 00:25:12,720 --> 00:25:16,199 Speaker 1: calculation when you're talking about importing less from abroad, but 434 00:25:16,280 --> 00:25:18,200 Speaker 1: it does speak to the fact that the consumer is 435 00:25:18,240 --> 00:25:21,360 Speaker 1: still on very moderate footing. If the U S consumer 436 00:25:21,480 --> 00:25:23,480 Speaker 1: was as strong as I think the Fed would have 437 00:25:23,560 --> 00:25:26,240 Speaker 1: us believe, you would have seen in gard growth remain 438 00:25:26,400 --> 00:25:29,200 Speaker 1: positive through the end of the year. But that's now 439 00:25:29,240 --> 00:25:33,040 Speaker 1: been revised down from one point one to negative point six. 440 00:25:33,680 --> 00:25:35,600 Speaker 1: And as Tom as you mentioned, we see selling in 441 00:25:35,640 --> 00:25:37,679 Speaker 1: the two year with the yield spiking up to seventy 442 00:25:37,720 --> 00:25:41,520 Speaker 1: five basis point nine to be exact, lindsay, what does 443 00:25:41,560 --> 00:25:44,840 Speaker 1: this do to all the conversation about a recession were 444 00:25:45,040 --> 00:25:48,240 Speaker 1: we're bound for recession, there's a recession looming. Does this 445 00:25:48,359 --> 00:25:50,080 Speaker 1: take that off the table. I don't know if it 446 00:25:50,119 --> 00:25:52,920 Speaker 1: takes it off the table for those that have initiated 447 00:25:52,960 --> 00:25:55,560 Speaker 1: that discussion, but I think it certainly gives us another 448 00:25:55,680 --> 00:25:58,920 Speaker 1: data point to suggest, no, the economy is not falling 449 00:25:58,920 --> 00:26:01,439 Speaker 1: off the table. Still tep it. Mind, you remember we 450 00:26:01,480 --> 00:26:05,240 Speaker 1: still can't gain momentum beyond this stagnant two percent growth range. 451 00:26:05,560 --> 00:26:08,080 Speaker 1: But I think it does alleviate some of the talking 452 00:26:08,119 --> 00:26:13,040 Speaker 1: points for the recessentary possibility near term. In our final 453 00:26:13,119 --> 00:26:15,040 Speaker 1: final minute with Lindsay, we go to where a few 454 00:26:15,359 --> 00:26:19,240 Speaker 1: fail to tread with fear we look at real final sales. 455 00:26:19,600 --> 00:26:23,159 Speaker 1: What is real final sales, well, real final sales is 456 00:26:23,240 --> 00:26:26,240 Speaker 1: essentially looking at the growth rate less inventories. We want 457 00:26:26,240 --> 00:26:29,640 Speaker 1: to take out that very volatile inventory cycle. And what 458 00:26:29,680 --> 00:26:33,280 Speaker 1: we see is that real final sales were actually unchanged 459 00:26:33,320 --> 00:26:36,600 Speaker 1: in this report. So essentially we shifted around some of 460 00:26:36,640 --> 00:26:39,359 Speaker 1: the growth from category to category. But when we strip 461 00:26:39,359 --> 00:26:43,239 Speaker 1: out that volatile inventory cycle, real final sales unchanged at 462 00:26:43,280 --> 00:26:46,760 Speaker 1: one at the end of the year. So again reiterating 463 00:26:46,760 --> 00:26:50,080 Speaker 1: the story that the US economy did lose momentum at 464 00:26:50,080 --> 00:26:52,440 Speaker 1: the end of the year, but still very much on 465 00:26:52,640 --> 00:26:57,600 Speaker 1: positive legs with Stephile Nicholas, thank you so much, greatly appreciated. 466 00:26:57,880 --> 00:27:00,280 Speaker 1: That's when it's Scarlett. I'm looking for the nominal GDP 467 00:27:01,119 --> 00:27:03,600 Speaker 1: number here in the you know, the first table that 468 00:27:03,680 --> 00:27:06,240 Speaker 1: comes out, still looking forward, but you know, at the 469 00:27:06,320 --> 00:27:08,240 Speaker 1: end of the end of the day, the sub four 470 00:27:08,320 --> 00:27:11,680 Speaker 1: percent nominal GDP gets your attention absolutely. The core PC 471 00:27:12,320 --> 00:27:14,639 Speaker 1: number also get the pense attention. That's the measure that 472 00:27:14,680 --> 00:27:17,479 Speaker 1: they track most closely for inflation, and that increased one 473 00:27:17,520 --> 00:27:20,640 Speaker 1: point three a little bit faster than the initial one 474 00:27:20,640 --> 00:27:23,119 Speaker 1: percent that was recorded earlier. I think I got a 475 00:27:23,200 --> 00:27:26,399 Speaker 1: run rate of current g d P, which is economic 476 00:27:26,440 --> 00:27:30,960 Speaker 1: talk phenomenal of two point zero percent. That certainly doesn't 477 00:27:31,000 --> 00:27:39,480 Speaker 1: get it done. Futures Up thirteen. This hour of surveillance 478 00:27:39,520 --> 00:27:41,840 Speaker 1: is brought to you by Volvo Cars, White Planes. Visit 479 00:27:41,880 --> 00:27:45,360 Speaker 1: Volvo Cars, White Planes dot Com. John Tucker has Our 480 00:27:45,400 --> 00:27:50,840 Speaker 1: News and a Scarlett and Tom Marco Rubio unleashing campaign's 481 00:27:50,880 --> 00:27:53,359 Speaker 1: worth of Harnsch criticism on Donald Trump at the final 482 00:27:53,400 --> 00:27:57,560 Speaker 1: Republican debate before Tuesday's a crucial Primaries. The problem maybe 483 00:27:57,560 --> 00:28:00,080 Speaker 1: that it took ten debates and three Trump victories to 484 00:28:00,119 --> 00:28:04,199 Speaker 1: get Rubio fired up. United Nations Security Council this weekend 485 00:28:04,240 --> 00:28:08,080 Speaker 1: considers tougher sanctions on North Korea and curtailing the regimes 486 00:28:08,119 --> 00:28:11,639 Speaker 1: nuclear ambitions after the country conducted a fourth nuclear task 487 00:28:11,960 --> 00:28:15,800 Speaker 1: at rocket launch earlier this year. U S officials say 488 00:28:15,800 --> 00:28:18,639 Speaker 1: the Pentagon has launched a newly aggressive campaign of cyber 489 00:28:18,680 --> 00:28:22,080 Speaker 1: attacks against the Islamic State militants. It's a targeted affort 490 00:28:22,160 --> 00:28:25,159 Speaker 1: to erode the group's abilities to use social media and 491 00:28:25,320 --> 00:28:30,000 Speaker 1: the Internet. And Yes, Oscar Weekend, Tom New Regency Productions 492 00:28:30,400 --> 00:28:34,240 Speaker 1: could score a rare three peat at the Academy Awards 493 00:28:34,280 --> 00:28:37,720 Speaker 1: Sunday with a win for the Revenant, the Frontier drama 494 00:28:37,840 --> 00:28:41,080 Speaker 1: with Leo DiCaprio. The company, along with the distributed twentieth 495 00:28:41,120 --> 00:28:44,000 Speaker 1: Century Fox, already holds the last two best to picture 496 00:28:44,040 --> 00:28:50,720 Speaker 1: oscars with Birdman and Twelve Years a Slave from I 497 00:28:50,760 --> 00:28:53,320 Speaker 1: haven't seen any of them. Later in our hour here 498 00:28:53,320 --> 00:28:55,760 Speaker 1: we went ninety minutes left at Bloomberg Surveillance. We will 499 00:28:55,800 --> 00:29:02,440 Speaker 1: speak with surveillance celebrity Loadstone, Scarlet Food about this, John Tucker, 500 00:29:02,520 --> 00:29:04,680 Speaker 1: Thank you so much, Scarlet. We have sports we do. 501 00:29:04,760 --> 00:29:07,000 Speaker 1: It is time now for the Katina Outo group. Bloomberg 502 00:29:07,080 --> 00:29:12,680 Speaker 1: NBC Sports update. All right, Scarlett. All three local hockey 503 00:29:12,720 --> 00:29:15,160 Speaker 1: teams were on the road last night. Rangers won two 504 00:29:15,200 --> 00:29:17,680 Speaker 1: one in St. Louis. They were coming off a lost 505 00:29:17,680 --> 00:29:19,280 Speaker 1: in New Jersey. They still have not had back to 506 00:29:19,360 --> 00:29:23,160 Speaker 1: back losses since mid December. Henrik Lukis made thirty five Saints, 507 00:29:23,200 --> 00:29:26,080 Speaker 1: became the third goalie in NHL history win thirty or 508 00:29:26,120 --> 00:29:29,000 Speaker 1: more games and at least ten seasons. After the Devil's 509 00:29:29,320 --> 00:29:31,920 Speaker 1: lost badly at Columbus six to one, Nick Felino had 510 00:29:31,960 --> 00:29:34,480 Speaker 1: the hat trick for the Blue Jackets in Calgary. The 511 00:29:34,560 --> 00:29:37,640 Speaker 1: Islanders Thomas Hicky sports third period to tie the game 512 00:29:37,680 --> 00:29:40,520 Speaker 1: and then late in overtime baris holding to the writers 513 00:29:40,520 --> 00:29:45,720 Speaker 1: old the Calgary line big chased by Fatahan, I turned 514 00:29:45,720 --> 00:29:55,400 Speaker 1: off controlled send it to the Parish Stars through the 515 00:29:55,400 --> 00:29:57,640 Speaker 1: one at Calgary, their third straight win and that second 516 00:29:57,680 --> 00:29:59,800 Speaker 1: stop on this club record nine game road trip at 517 00:29:59,800 --> 00:30:02,000 Speaker 1: Once sixteen one or six win at Phoenix, who's lost 518 00:30:02,040 --> 00:30:05,520 Speaker 1: thirteen in a row. Nets made news earlier releasing Joe Johnson, 519 00:30:05,600 --> 00:30:07,000 Speaker 1: who was in his his fourth seasons, made a lot of 520 00:30:07,000 --> 00:30:10,160 Speaker 1: money twenty five million this year, hit several game winning shots. 521 00:30:10,200 --> 00:30:12,040 Speaker 1: The Net's never one of playoff series with him and 522 00:30:12,040 --> 00:30:14,720 Speaker 1: certainly won't this year. Johnson can have join another team, 523 00:30:14,760 --> 00:30:17,080 Speaker 1: and he's seen many teams are interested. College hips went 524 00:30:17,120 --> 00:30:19,400 Speaker 1: for Seton Hall could go a long way towards getting 525 00:30:19,400 --> 00:30:21,600 Speaker 1: the Pirates into the NT double A seventy to fifty 526 00:30:21,600 --> 00:30:24,040 Speaker 1: two of the Providence a week after beating De Paul 527 00:30:24,080 --> 00:30:26,200 Speaker 1: the in its first Big East win. St. John's lost 528 00:30:26,200 --> 00:30:29,360 Speaker 1: at De Paul eight three seventy five. With the Bloomberg 529 00:30:29,480 --> 00:30:33,520 Speaker 1: NBC Sports update on john Stick John thank you so much, Scarlett. 530 00:30:33,600 --> 00:30:35,160 Speaker 1: We mentioned to Arrange is he going to be the 531 00:30:35,160 --> 00:30:37,520 Speaker 1: fun time of hockey? I mean it's getting to be 532 00:30:37,720 --> 00:30:41,080 Speaker 1: the nerve wracking partner ready. Yeah, I actually had not 533 00:30:41,160 --> 00:30:43,280 Speaker 1: realized that the Leakers had not lost back to back classes. 534 00:30:43,280 --> 00:30:45,040 Speaker 1: That felt like they had for a while, because your 535 00:30:45,080 --> 00:30:47,360 Speaker 1: emotions go off and down so much. Remember that game 536 00:30:47,360 --> 00:30:49,160 Speaker 1: that we went to against the Canadians, the one that 537 00:30:49,240 --> 00:30:51,880 Speaker 1: began the awful streak. Yes, we said, our people made 538 00:30:51,920 --> 00:30:54,080 Speaker 1: us sit in two different parts of medicine. Yeah, I 539 00:30:54,080 --> 00:30:55,800 Speaker 1: would have caused too much of commotion. If we're together, 540 00:30:56,120 --> 00:30:58,280 Speaker 1: If we've been together, you know, lun Chris would have 541 00:30:58,320 --> 00:31:00,160 Speaker 1: been on Have you have been able to concentrate all? 542 00:31:00,320 --> 00:31:03,600 Speaker 1: As it turns out, he wasn't able to concentrate because 543 00:31:03,600 --> 00:31:07,400 Speaker 1: they lost. They lost really badly. It was an ugly game. 544 00:31:07,520 --> 00:31:10,920 Speaker 1: Right now, A good markets just a fourteen delfeaches up 545 00:31:10,960 --> 00:31:16,200 Speaker 1: one Scarlet Foo and Tom Keen on a Friday Bloomberg Surveillance. 546 00:31:20,680 --> 00:31:22,800 Speaker 1: The Sports Report was brought to you by Ray Katina 547 00:31:22,840 --> 00:31:25,920 Speaker 1: Auto Group. Everyone deserves to dry Mercedes Bend from Raykatina. 548 00:31:26,000 --> 00:31:29,280 Speaker 1: Make it happen at Raycatina Motorcar in Edison, Mary Cotina 549 00:31:29,440 --> 00:31:31,960 Speaker 1: Union and the new Racotina A freehold or go to 550 00:31:32,040 --> 00:31:39,880 Speaker 1: ray Katina dot Com. Global Business News twenty four hours 551 00:31:39,880 --> 00:31:43,240 Speaker 1: a day at Bloomberg dot com, the Radio Plus mobile app, 552 00:31:43,320 --> 00:31:47,360 Speaker 1: and on your radio. He's a Bloomberg Business Flash and 553 00:31:47,400 --> 00:31:50,880 Speaker 1: I'm Karen Moscow. The US economy unexpectedly expanded at a 554 00:31:50,920 --> 00:31:54,720 Speaker 1: faster pace in the fourth quarter than initially estimated, reflecting 555 00:31:54,720 --> 00:31:58,280 Speaker 1: a higher value of business inventories, gross domestic product the 556 00:31:58,360 --> 00:32:00,520 Speaker 1: value of all goods and services for US to grow 557 00:32:00,520 --> 00:32:03,520 Speaker 1: at a one percent annualized rate compared with an initial 558 00:32:03,600 --> 00:32:07,360 Speaker 1: estimate of seven tenths percent, and consumer spending was revised lower. 559 00:32:07,720 --> 00:32:10,600 Speaker 1: U s Dock Index future has remained higher following that report, 560 00:32:10,640 --> 00:32:14,240 Speaker 1: with SMP eveny futures of fourteen points, Dowie Many futures 561 00:32:14,240 --> 00:32:16,600 Speaker 1: of A hundred twenty two, and as docive any futures 562 00:32:16,600 --> 00:32:19,400 Speaker 1: of thirty seven. We checked the markets every fifteen minutes 563 00:32:19,440 --> 00:32:22,280 Speaker 1: throughout the trading day on Bloomberg decks in Germany's up 564 00:32:22,280 --> 00:32:25,200 Speaker 1: two percent ten, your treasury down eleven thirty seconds, the 565 00:32:25,280 --> 00:32:28,440 Speaker 1: yield one point seven five percent Nimax screwd oil of 566 00:32:28,520 --> 00:32:30,920 Speaker 1: three point four percent or a dollar eleven to thirty 567 00:32:30,920 --> 00:32:33,959 Speaker 1: four seventeen a barrel Comax gold down six tenths per 568 00:32:34,000 --> 00:32:36,400 Speaker 1: cent or seven dollars ninety cents to twelve thirty one 569 00:32:36,400 --> 00:32:39,200 Speaker 1: announced the euro and dollar oh nine nine three. The 570 00:32:39,400 --> 00:32:43,520 Speaker 1: N one thirteen point to five euro area inflation looks 571 00:32:43,520 --> 00:32:45,920 Speaker 1: to be cooling more than expected, with prices in three 572 00:32:45,920 --> 00:32:48,920 Speaker 1: other regions for the largest economies and missing estimates, and 573 00:32:49,040 --> 00:32:51,920 Speaker 1: strengthening the case for an expansion of the European Central 574 00:32:51,920 --> 00:32:56,000 Speaker 1: banks monetary stimulus in March. Consumer prices slit in Germany, 575 00:32:56,040 --> 00:32:58,600 Speaker 1: France and Spain in the year to February figures show 576 00:32:58,680 --> 00:33:01,880 Speaker 1: today and as a blue Bird business flash, Thomas Scarlett 577 00:33:02,440 --> 00:33:06,880 Speaker 1: Karen thank you so much. It is on Wall Street. 578 00:33:07,920 --> 00:33:11,479 Speaker 1: The following is from Bloomberg View. Opinions and commentary from 579 00:33:11,480 --> 00:33:15,360 Speaker 1: Bloomberg columnists. I'm a chpreneur, a columnist for Bloomberg View. 580 00:33:15,520 --> 00:33:18,200 Speaker 1: As Britain prepares to vote on leaving the European Union, 581 00:33:18,280 --> 00:33:21,600 Speaker 1: President Obama is reportedly considering repeating as advice that it 582 00:33:21,720 --> 00:33:24,480 Speaker 1: stay in silence is a better idea. Britain is our 583 00:33:24,520 --> 00:33:27,160 Speaker 1: closest ally among the European powers, and so it does 584 00:33:27,200 --> 00:33:30,000 Speaker 1: often argue that its influence on the EU helps us. 585 00:33:30,200 --> 00:33:32,680 Speaker 1: But it's up to the British to determine what relationship 586 00:33:32,720 --> 00:33:35,360 Speaker 1: with Europe maximizes their influence in the world. We have 587 00:33:35,400 --> 00:33:37,520 Speaker 1: an interest in that question, but it's not as great 588 00:33:37,560 --> 00:33:40,760 Speaker 1: as theirs. If they think the EU sets back their interests, 589 00:33:40,800 --> 00:33:43,600 Speaker 1: we can't reasonably ask them to stay because it suits us. 590 00:33:43,880 --> 00:33:46,120 Speaker 1: The Obama administration is hinted that we might not have 591 00:33:46,200 --> 00:33:49,760 Speaker 1: friendly trade relations with a post EU Britain. Carrying through 592 00:33:49,800 --> 00:33:52,520 Speaker 1: that threat would be harmful to us and serve no purpose, 593 00:33:52,680 --> 00:33:54,880 Speaker 1: which means it's not a credible threat. What we should 594 00:33:54,920 --> 00:33:56,880 Speaker 1: tell the British is that we trust them to make 595 00:33:56,920 --> 00:33:59,400 Speaker 1: their own decision and will have a strong relationship with 596 00:33:59,480 --> 00:34:02,600 Speaker 1: them either way. I'm for more view Please go to 597 00:34:02,600 --> 00:34:05,760 Speaker 1: Bloomberg View dot com. Review go on the Bloomberg terminal. 598 00:34:06,120 --> 00:34:09,920 Speaker 1: This has been Bloomberg View and bloom Review commentary is 599 00:34:09,920 --> 00:34:12,680 Speaker 1: can be here in hourly weekdays on Bloomberg Radio, Tom 600 00:34:12,760 --> 00:34:17,600 Speaker 1: keenan Scarlet Foo with us today Michael McKee on assignment. 601 00:34:17,920 --> 00:34:20,960 Speaker 1: Scarlett has decided to step in. Scarlett earlier in the 602 00:34:21,000 --> 00:34:24,040 Speaker 1: week we saw the drop in the British pound. We 603 00:34:24,200 --> 00:34:27,719 Speaker 1: come back to one. But on a Monday ago, five 604 00:34:27,800 --> 00:34:30,759 Speaker 1: days ago, if we said it was a one three, 605 00:34:30,800 --> 00:34:34,360 Speaker 1: that would have been headline um making, and I guess 606 00:34:34,360 --> 00:34:36,879 Speaker 1: we stagger around to June and Brexit and all that. 607 00:34:37,280 --> 00:34:40,120 Speaker 1: But it really folds into the G twenty meeting where 608 00:34:40,160 --> 00:34:43,160 Speaker 1: the presumption interview after interviews, nothing's gonna happen. I don't 609 00:34:43,160 --> 00:34:46,600 Speaker 1: buy it. Well, here's where I'm a little confused, because 610 00:34:46,600 --> 00:34:49,160 Speaker 1: people came into this meeting thinking that there would be 611 00:34:49,200 --> 00:34:51,560 Speaker 1: some kind of grand proclamation or there would be some 612 00:34:52,840 --> 00:34:57,040 Speaker 1: work done where they might agree to come together and say, 613 00:34:57,160 --> 00:34:59,440 Speaker 1: de value the event once and for all and get 614 00:34:59,560 --> 00:35:03,000 Speaker 1: rid of this drip drab policy or not even policy 615 00:35:03,080 --> 00:35:06,960 Speaker 1: approach to weakening the UN. Then the fact that Jack 616 00:35:07,080 --> 00:35:09,680 Speaker 1: Luke came out on Bloomberg Television and told our David 617 00:35:09,719 --> 00:35:12,080 Speaker 1: Weston that, uh, that kind of thing is not in 618 00:35:12,120 --> 00:35:17,359 Speaker 1: the offing. Had everyone worried. Why Why would everyone think 619 00:35:17,400 --> 00:35:22,000 Speaker 1: that the G twenty, separate members, everyone has their own interest, 620 00:35:22,239 --> 00:35:24,399 Speaker 1: would be able to come together and come and come 621 00:35:24,440 --> 00:35:27,080 Speaker 1: with any agreement. And Virginia Mason, who nailed this this 622 00:35:27,160 --> 00:35:29,719 Speaker 1: morning with her experience of Trots and Pimco. She was 623 00:35:29,800 --> 00:35:34,000 Speaker 1: on a surveillance on television. She's a portfolio manager with 624 00:35:34,080 --> 00:35:37,840 Speaker 1: a bigger, broader sixty foot view and Ms Mason have 625 00:35:37,920 --> 00:35:41,080 Speaker 1: made clear what is needed if you're going to get 626 00:35:41,239 --> 00:35:45,160 Speaker 1: drama is level of crisis and we're just not there. 627 00:35:45,719 --> 00:35:51,720 Speaker 1: Villain bowder It's City group is adamant that without financial instability, 628 00:35:51,920 --> 00:35:54,840 Speaker 1: institutions are not going to come to the rescue and 629 00:35:54,840 --> 00:35:57,520 Speaker 1: they're not going to save the day. And in fact, 630 00:35:56,800 --> 00:36:00,080 Speaker 1: that's where we are right now. And in fact, his 631 00:36:00,200 --> 00:36:03,920 Speaker 1: shop only estimates fifty chance of a recession. So you're 632 00:36:03,920 --> 00:36:07,440 Speaker 1: saying anything could happen at this point. Yeah, I mean, 633 00:36:07,520 --> 00:36:10,960 Speaker 1: I just find it into the weekend, and of course 634 00:36:10,960 --> 00:36:14,479 Speaker 1: we'll all do our reading over the weekend, uh and 635 00:36:14,480 --> 00:36:17,560 Speaker 1: of course as we go to Super Tuesday as well. 636 00:36:17,600 --> 00:36:22,239 Speaker 1: But the basic idea of what didn't happen this week 637 00:36:22,440 --> 00:36:24,040 Speaker 1: is just as important as the news that we saw 638 00:36:24,239 --> 00:36:27,440 Speaker 1: didn't What didn't happen this week, we're institutions writing to 639 00:36:27,520 --> 00:36:30,000 Speaker 1: the rescue. Where's the Jack lou interview. There's a distinct 640 00:36:30,120 --> 00:36:33,239 Speaker 1: lack of urgency heading into this G twenty and I 641 00:36:33,239 --> 00:36:35,600 Speaker 1: would say a distinct lack of urgency heading in the 642 00:36:35,680 --> 00:36:38,840 Speaker 1: barge and to the glunt cruise point. You know, you 643 00:36:38,960 --> 00:36:41,879 Speaker 1: see this out on the different articles that people very 644 00:36:41,920 --> 00:36:45,040 Speaker 1: cautious and very upset feel they're sort of waiting for 645 00:36:45,080 --> 00:36:49,879 Speaker 1: something in March, and that waiting has to come from 646 00:36:50,000 --> 00:36:53,680 Speaker 1: action from crisis, and the jump moves for now aren't there. 647 00:36:53,719 --> 00:36:56,200 Speaker 1: I'll give you one exception, though, I'm looking at the 648 00:36:56,200 --> 00:36:58,760 Speaker 1: Bloomberg folks. It's the red Knight put the photo out before. 649 00:36:58,800 --> 00:37:02,960 Speaker 1: In social the basic idea of the entire screen is 650 00:37:03,000 --> 00:37:06,759 Speaker 1: complacent oil oil up a dollar twenty two, except the 651 00:37:06,840 --> 00:37:10,680 Speaker 1: German two year negative point five one shows that angst 652 00:37:10,719 --> 00:37:15,680 Speaker 1: For American GDP analysis, John Herman with Mitsubishi, John, what 653 00:37:16,320 --> 00:37:19,439 Speaker 1: was the thing you gleaned? How did this update? Okay, 654 00:37:19,480 --> 00:37:21,400 Speaker 1: so the update what it? What it call? Those couple 655 00:37:21,440 --> 00:37:23,560 Speaker 1: of you know, a couple of important things. One is 656 00:37:24,160 --> 00:37:26,000 Speaker 1: we didn't we were thinking that we were going to 657 00:37:26,120 --> 00:37:30,320 Speaker 1: go through more of an inventory correction in the second 658 00:37:30,320 --> 00:37:32,560 Speaker 1: half of last year, and we really didn't get it. 659 00:37:32,600 --> 00:37:34,880 Speaker 1: So we still kind of have that over hanging a 660 00:37:34,880 --> 00:37:37,640 Speaker 1: little bit first quarter or so. But when we move 661 00:37:37,719 --> 00:37:40,600 Speaker 1: pat that's all very very temporary, transitory and stuff like that. 662 00:37:40,760 --> 00:37:43,359 Speaker 1: When we moved past that, uh, you know, what we're 663 00:37:43,360 --> 00:37:48,200 Speaker 1: seeing is basically seeing a pretty decent residential construction sector, 664 00:37:48,840 --> 00:37:51,239 Speaker 1: personal consumer. I mean, we're not we're not back in 665 00:37:51,239 --> 00:37:53,759 Speaker 1: the nineties or last seconde or the eighties, but you know, 666 00:37:53,760 --> 00:37:56,600 Speaker 1: we're running at that two percent clip and the consumer 667 00:37:56,680 --> 00:38:00,040 Speaker 1: which is you know, relatively good. We keep maintain in 668 00:38:00,239 --> 00:38:03,680 Speaker 1: that business, spending a touch software on the revisions, but 669 00:38:04,080 --> 00:38:08,160 Speaker 1: you know, nothing outlandish. So we're all trans we're all transforms. 670 00:38:08,239 --> 00:38:11,520 Speaker 1: Is too people had gotten too pessimistic. You know what 671 00:38:11,560 --> 00:38:14,680 Speaker 1: they did was market participants. They say said, gee, you know, 672 00:38:14,680 --> 00:38:17,640 Speaker 1: the economy is really going to underperform this year. Inflation 673 00:38:17,680 --> 00:38:20,680 Speaker 1: is really underperformance. On what's happening is the data. The 674 00:38:20,719 --> 00:38:24,280 Speaker 1: actual data rolling in is not quite as bad sentiment, 675 00:38:24,360 --> 00:38:26,360 Speaker 1: so they might set out and that was like, you know, 676 00:38:26,520 --> 00:38:28,920 Speaker 1: kind of crazy just because of time. I want to 677 00:38:28,960 --> 00:38:31,040 Speaker 1: get to the thing you've been dead on on, and 678 00:38:31,080 --> 00:38:35,239 Speaker 1: that's curve flattening. Vanilla tues tends spread in a very 679 00:38:35,360 --> 00:38:38,680 Speaker 1: John Herman way. Is it a hundred basis points spending 680 00:38:38,680 --> 00:38:41,880 Speaker 1: the week beneath that? Give us an update on what 681 00:38:42,160 --> 00:38:46,359 Speaker 1: curve flattening tells you? What it? What it tells you 682 00:38:46,400 --> 00:38:49,520 Speaker 1: is this, Uh it's like you said, it's it's plain vanilla, 683 00:38:49,960 --> 00:38:52,359 Speaker 1: but you know we're in an environment that that kind 684 00:38:52,360 --> 00:38:54,399 Speaker 1: of fits it. What it tells you is it tells 685 00:38:54,440 --> 00:38:57,000 Speaker 1: you the economy is going to continue to run at 686 00:38:57,000 --> 00:39:00,600 Speaker 1: sort of this two percent clip. The first and second 687 00:39:00,600 --> 00:39:03,359 Speaker 1: thing is inflation is going to gradually grind its way 688 00:39:03,440 --> 00:39:05,719 Speaker 1: up to about you know, one point six, one point 689 00:39:05,800 --> 00:39:09,080 Speaker 1: seven percent this year, one point eight percent this year. 690 00:39:09,760 --> 00:39:12,000 Speaker 1: That keeps the FED in the game. Although people have 691 00:39:12,120 --> 00:39:13,879 Speaker 1: priced to fed out, they're gonna have to start pricing 692 00:39:13,920 --> 00:39:16,080 Speaker 1: to fed back in uh. And what it just tells 693 00:39:16,120 --> 00:39:19,279 Speaker 1: you is that the economy doesn't have um sort of 694 00:39:19,320 --> 00:39:22,640 Speaker 1: the acceleration to move and break out of this this 695 00:39:22,760 --> 00:39:26,680 Speaker 1: sort of um stasis, doesn't have the ability to accelerate 696 00:39:26,719 --> 00:39:30,560 Speaker 1: past it. But on the other hand, we're grinding up 697 00:39:30,719 --> 00:39:34,120 Speaker 1: enough that you know, the FED you cannot really tries 698 00:39:34,160 --> 00:39:36,000 Speaker 1: to fed out of the game. You just can't do it. 699 00:39:36,960 --> 00:39:38,920 Speaker 1: That was the mistake people. Man, When we look at 700 00:39:38,960 --> 00:39:42,400 Speaker 1: the curl flattening, are we do we presume that it 701 00:39:42,440 --> 00:39:45,000 Speaker 1: will lead to an inversion? And what would that tell 702 00:39:45,040 --> 00:39:47,239 Speaker 1: us about the prospect of recession? I think, I think 703 00:39:47,239 --> 00:39:49,960 Speaker 1: where you get you're getting this on the back end 704 00:39:50,000 --> 00:39:52,040 Speaker 1: of the curve. You do have kind of you know, 705 00:39:52,640 --> 00:39:55,360 Speaker 1: you have the inflation that's up but not accelerate, but 706 00:39:55,480 --> 00:39:57,680 Speaker 1: you have a negative rates everywhere else in the world, 707 00:39:57,880 --> 00:40:00,560 Speaker 1: and those investors need to get some kind of yield, 708 00:40:00,560 --> 00:40:03,640 Speaker 1: and they're coming here to get their yield. So Europeans, Japanese, 709 00:40:03,840 --> 00:40:06,120 Speaker 1: Asian accounts. I'm on the phone with a Central Bank 710 00:40:06,120 --> 00:40:08,839 Speaker 1: of Brazilian five minutes. You know, they're looking to buy 711 00:40:09,280 --> 00:40:14,000 Speaker 1: treasuries so that the overseas markets, the investors are buying. 712 00:40:14,160 --> 00:40:16,600 Speaker 1: That kicks the back end yeels low. So that's what 713 00:40:16,680 --> 00:40:19,000 Speaker 1: part of our thesis. The second part is that you 714 00:40:19,040 --> 00:40:21,880 Speaker 1: cannot the economy is going decent enough that you cannot 715 00:40:21,880 --> 00:40:24,040 Speaker 1: price to fed out to zero, which is you know, 716 00:40:24,080 --> 00:40:25,759 Speaker 1: people were talking about just a couple of weeks ago, 717 00:40:25,840 --> 00:40:27,920 Speaker 1: Oh the feathers gonna go negative rates. I mean, you 718 00:40:28,000 --> 00:40:30,239 Speaker 1: just can't. You know, you may go negative rates, but 719 00:40:30,239 --> 00:40:32,680 Speaker 1: it may not be until like but you know, in 720 00:40:33,560 --> 00:40:36,720 Speaker 1: but like in the foreseeable future, you know, most likely 721 00:40:37,160 --> 00:40:39,400 Speaker 1: you may see a couple of rate hikes. And there's 722 00:40:39,440 --> 00:40:42,480 Speaker 1: your two cents slider. You don't get the escape velocity 723 00:40:42,560 --> 00:40:46,000 Speaker 1: that pushes the back meaningfully above you, and you kind 724 00:40:46,000 --> 00:40:48,200 Speaker 1: of keep yourself in this game, right John, And when 725 00:40:48,200 --> 00:40:50,040 Speaker 1: the minute we've got left with you at the bottom 726 00:40:50,040 --> 00:40:52,120 Speaker 1: of your latest research note, and you are the king 727 00:40:52,160 --> 00:40:56,600 Speaker 1: of granular, you have an unemployment rate fractionally below four 728 00:40:56,680 --> 00:41:00,000 Speaker 1: percent out a couple of years and the labor participate 729 00:41:00,080 --> 00:41:04,760 Speaker 1: patient rate goes nowhere. Why is unfortunately? Why is that 730 00:41:05,120 --> 00:41:08,239 Speaker 1: we we unfortunately when you compare the US, this is 731 00:41:08,320 --> 00:41:10,560 Speaker 1: very unfortunate, and I wish we would get more attention 732 00:41:10,640 --> 00:41:13,120 Speaker 1: on this. When you compare the US to the other 733 00:41:13,120 --> 00:41:15,919 Speaker 1: G seven economies, we have the for the prime age 734 00:41:15,920 --> 00:41:18,160 Speaker 1: males and primary females, we have one of the lowest 735 00:41:18,520 --> 00:41:21,719 Speaker 1: prime age participation rates for men and women in the 736 00:41:21,800 --> 00:41:24,680 Speaker 1: United States versus resid G seven economies. Only Italy is 737 00:41:24,719 --> 00:41:27,040 Speaker 1: worse than US. So that's first thing, So that gives 738 00:41:27,040 --> 00:41:29,320 Speaker 1: you should give you, you know, a reality check. The 739 00:41:29,360 --> 00:41:31,680 Speaker 1: other problem is we have, you know, when you pass 740 00:41:31,760 --> 00:41:34,279 Speaker 1: the prime age is we've got baby boomers retiring and 741 00:41:34,320 --> 00:41:37,600 Speaker 1: exiting the labor force at a pace that's much faster 742 00:41:38,080 --> 00:41:42,280 Speaker 1: than what their natural offspring we are able to replace 743 00:41:42,320 --> 00:41:44,640 Speaker 1: them at because it's just it's just it's just too 744 00:41:44,640 --> 00:41:48,520 Speaker 1: slow and replacement. So you get the participation rate for 745 00:41:48,560 --> 00:41:51,720 Speaker 1: both reasons, the prime age structure, and but we're also 746 00:41:51,760 --> 00:41:56,680 Speaker 1: seeing young kids not participating enough. Parents have to encourage it. 747 00:41:56,800 --> 00:42:00,560 Speaker 1: I mean, you're blaming me, You're blaming me. I'll I'll 748 00:42:00,560 --> 00:42:02,640 Speaker 1: say this I'll say this song. When you look back, 749 00:42:02,719 --> 00:42:04,239 Speaker 1: you know we had we had something similar in the 750 00:42:04,239 --> 00:42:07,320 Speaker 1: early nineteen sixties when you know when they did that 751 00:42:07,400 --> 00:42:10,120 Speaker 1: wrote that book to Graduate, you know with Dustin Hoppins, 752 00:42:10,120 --> 00:42:12,080 Speaker 1: that that was the earlier. It wasn't in the end 753 00:42:12,080 --> 00:42:14,359 Speaker 1: of the earlier. And what they were saying, they were saying, 754 00:42:14,400 --> 00:42:16,319 Speaker 1: they were saying that America was so wealthy at that 755 00:42:16,320 --> 00:42:20,920 Speaker 1: time that that kids were, you know, foregoing work because 756 00:42:20,920 --> 00:42:24,200 Speaker 1: they apparent. This is this is the talk you get, Scarlett. 757 00:42:24,760 --> 00:42:28,680 Speaker 1: This is the stop people, John Herman. This is the 758 00:42:28,840 --> 00:42:32,319 Speaker 1: kind of talk you get from newly made fathers who 759 00:42:32,440 --> 00:42:35,800 Speaker 1: have brand new babies and rail about teenagers and lazy 760 00:42:35,840 --> 00:42:40,160 Speaker 1: college students. Ye, Chad Herman, thank you so much in 761 00:42:40,239 --> 00:42:44,560 Speaker 1: congratulations again on a newly born Herman Scarlett, Food and 762 00:42:44,640 --> 00:42:47,640 Speaker 1: Tom came another hour of Bloombridge surveillance.