1 00:00:03,080 --> 00:00:06,760 Speaker 1: This is Bloomberg surveillance. It's not the job of finance 2 00:00:06,840 --> 00:00:09,640 Speaker 1: ministers and central bank governors to accelerate a crisis. It's 3 00:00:09,640 --> 00:00:12,080 Speaker 1: our job to try and avoid a crisis. The danger 4 00:00:12,240 --> 00:00:15,520 Speaker 1: of what's going on in market at the moment is 5 00:00:15,560 --> 00:00:19,319 Speaker 1: that it does feed back to the real economy. Right now, 6 00:00:19,520 --> 00:00:23,000 Speaker 1: I don't think we need to do any new fiscal policy, 7 00:00:23,200 --> 00:00:26,240 Speaker 1: so it's really a question about what's going to happen 8 00:00:26,239 --> 00:00:29,760 Speaker 1: in the future. Bloomberg Surveillance your linked to the world 9 00:00:29,800 --> 00:00:35,280 Speaker 1: of economics, finance, and investment on Bloomberg Radio. Good morning, 10 00:00:35,440 --> 00:00:38,479 Speaker 1: Michael McKee. It is seven on Wall Street, eight pm 11 00:00:38,520 --> 00:00:41,880 Speaker 1: in Shanghai, where the un is falling after China cuts 12 00:00:41,960 --> 00:00:46,040 Speaker 1: bank reserve ratios by fifty basis points. The rest of 13 00:00:46,040 --> 00:00:49,239 Speaker 1: the world so far ignoring it. The G twenty of 14 00:00:49,280 --> 00:00:51,880 Speaker 1: course over the weekend telling investors they worry too much. 15 00:00:52,400 --> 00:00:55,040 Speaker 1: This morning, markets throwing their toys out of the pram 16 00:00:55,080 --> 00:00:58,720 Speaker 1: in response, Tokyo finished down one point three percent. Europe 17 00:00:58,720 --> 00:01:00,840 Speaker 1: at the moment is lower the Star six hundred by 18 00:01:00,920 --> 00:01:04,320 Speaker 1: three tenths about a point. The decks is down ninety 19 00:01:04,400 --> 00:01:08,760 Speaker 1: five points uh full percentage point lower. We are at 20 00:01:08,760 --> 00:01:12,760 Speaker 1: the moment looking at a headline from the Bloomberg Professional 21 00:01:12,840 --> 00:01:16,319 Speaker 1: federal mogul getting a merger proposal from Icon Enterprises. Will 22 00:01:16,400 --> 00:01:19,160 Speaker 1: check that out and get you more details as they 23 00:01:19,280 --> 00:01:23,200 Speaker 1: become available. In the US, futures are lower, although they 24 00:01:23,240 --> 00:01:26,320 Speaker 1: have paired their losses. S ANDP futures down by three points, 25 00:01:26,640 --> 00:01:28,440 Speaker 1: a little over a tenth of a percent. It's a 26 00:01:28,480 --> 00:01:30,759 Speaker 1: two tents stop for down futures. They're off thirty one 27 00:01:30,800 --> 00:01:34,360 Speaker 1: and Nasdaq futures of fourteen points now three tenths of 28 00:01:34,520 --> 00:01:38,760 Speaker 1: eight per cent. The M curve moving lower in the 29 00:01:38,840 --> 00:01:42,119 Speaker 1: US and in Germany right now, the two year at 30 00:01:42,160 --> 00:01:44,880 Speaker 1: seventy eight basis points to five year one point to three, 31 00:01:45,200 --> 00:01:48,080 Speaker 1: the ten ure going for one seventy five in the 32 00:01:48,200 --> 00:01:52,320 Speaker 1: US eight from two years to eight years. German yields 33 00:01:52,560 --> 00:01:55,120 Speaker 1: dropped to record lows. The two year in Germany now 34 00:01:55,360 --> 00:02:00,480 Speaker 1: negative fifty six basis points. Dollar strengthening today a little bit. 35 00:02:00,720 --> 00:02:03,160 Speaker 1: The d X Y index is up by two tents 36 00:02:03,160 --> 00:02:08,440 Speaker 1: of a percent. The yen is lower one, the euro 37 00:02:08,760 --> 00:02:13,040 Speaker 1: is lower five, the pounds lower one thirty eight, fifty two. 38 00:02:13,720 --> 00:02:17,080 Speaker 1: So um, that's the currency reaction to the G twenty 39 00:02:17,160 --> 00:02:22,480 Speaker 1: Right now. Oil is mixed West Texas Intermediate seventy nine unchanged, 40 00:02:22,520 --> 00:02:26,720 Speaker 1: Brent Crew up thirty cents on the day. So who 41 00:02:26,760 --> 00:02:30,880 Speaker 1: will be proved right G twenty policymakers or financial markets. 42 00:02:31,000 --> 00:02:34,480 Speaker 1: Ben Emmons as a managing director at Leader Capital, and 43 00:02:34,600 --> 00:02:38,000 Speaker 1: he's been watching the reaction to the G twenty statement. 44 00:02:38,480 --> 00:02:41,680 Speaker 1: Ben G twenty said that the fundamentals are better than 45 00:02:41,720 --> 00:02:47,040 Speaker 1: the markets think. The markets today don't agree. Hike, Good morning, Mike. Yes, indeed, 46 00:02:47,040 --> 00:02:50,120 Speaker 1: Marcus ston't agree. I think the G twenty statement was 47 00:02:50,240 --> 00:02:53,799 Speaker 1: kind of clear about global monetary policy can be used 48 00:02:53,840 --> 00:02:57,919 Speaker 1: for evaluations and kind of carry all of the carry 49 00:02:57,960 --> 00:03:02,080 Speaker 1: the you know, sort of four the economy. In other words, 50 00:03:02,080 --> 00:03:04,720 Speaker 1: you can keep relying on monthly policy. I think markets 51 00:03:04,760 --> 00:03:07,000 Speaker 1: are maybe reacting to that a little bit. I would 52 00:03:07,040 --> 00:03:10,480 Speaker 1: say though, that what happened overnight in China isn't necessarily 53 00:03:10,480 --> 00:03:14,520 Speaker 1: a positive because as the u Wan weekends with the night, 54 00:03:14,720 --> 00:03:17,520 Speaker 1: the manufacturing data and non manufacturing data coming out in 55 00:03:17,639 --> 00:03:20,200 Speaker 1: China may be linked to that too. People are looking 56 00:03:20,200 --> 00:03:22,880 Speaker 1: at this very closely. Each time that you want weekends, 57 00:03:23,600 --> 00:03:26,200 Speaker 1: it's maybe a precursor to that. The data there is 58 00:03:26,240 --> 00:03:30,320 Speaker 1: week two and we get this week non im data 59 00:03:30,360 --> 00:03:32,720 Speaker 1: out as well. So I think markets are wary of 60 00:03:32,800 --> 00:03:36,640 Speaker 1: that type of data while responding negatively, right, as you said, 61 00:03:36,720 --> 00:03:40,080 Speaker 1: the G twenty, it's typically not a really strong statement. 62 00:03:40,240 --> 00:03:42,120 Speaker 1: I think this time I felt that the statement was 63 00:03:42,200 --> 00:03:44,680 Speaker 1: very much about central banks. You can't do this all 64 00:03:44,720 --> 00:03:48,080 Speaker 1: by yourself, you know, it needs to be more coordinated. 65 00:03:48,440 --> 00:03:51,120 Speaker 1: And because there's no real clear agreement about the coordination, 66 00:03:51,200 --> 00:03:54,400 Speaker 1: at least with unclarity, and so that uncertainty doesn't help 67 00:03:54,440 --> 00:03:57,520 Speaker 1: market China. So markets disagree a lot of people suggesting 68 00:03:58,000 --> 00:04:02,400 Speaker 1: central banks are kind of at the point of diminishing returns, 69 00:04:02,440 --> 00:04:05,240 Speaker 1: if not worse. And I don't think anybody thinks that 70 00:04:05,280 --> 00:04:09,240 Speaker 1: there's the political world for fiscal response. So is this 71 00:04:09,360 --> 00:04:12,360 Speaker 1: really less about what's going on with the G twenty 72 00:04:12,400 --> 00:04:16,800 Speaker 1: than it is the markets looking at the economic situation, 73 00:04:17,279 --> 00:04:20,279 Speaker 1: looking at the GDP report in the US that was 74 00:04:21,040 --> 00:04:24,920 Speaker 1: better than expected, but the composition wasn't so great. Yeah, 75 00:04:24,960 --> 00:04:26,560 Speaker 1: I would agree with you there, and I think you know, 76 00:04:26,600 --> 00:04:29,480 Speaker 1: one of your stories on Top Stories this morning about 77 00:04:29,560 --> 00:04:32,640 Speaker 1: that the fat stuffs don't connect is a really good 78 00:04:32,680 --> 00:04:35,560 Speaker 1: point there. Markets are completely moved away from what the 79 00:04:35,600 --> 00:04:38,880 Speaker 1: federers have thought the path would look like, and that 80 00:04:39,000 --> 00:04:42,680 Speaker 1: indicates that markets have set like this dock amount of 81 00:04:42,800 --> 00:04:46,960 Speaker 1: policy isn't any more the solution for economic problems that 82 00:04:47,040 --> 00:04:51,279 Speaker 1: we have. Even negative rates have been clearly rejected by markets. 83 00:04:51,320 --> 00:04:53,880 Speaker 1: They look at this as a negative other than a positive. 84 00:04:54,600 --> 00:04:58,480 Speaker 1: And yet what we have left with is just monetary policy. 85 00:04:58,640 --> 00:05:01,920 Speaker 1: And I think the view has become too is like 86 00:05:01,920 --> 00:05:04,760 Speaker 1: what's going on in China will matter even more from 87 00:05:04,800 --> 00:05:07,799 Speaker 1: here on. Whatever the People's Bank of China, the Central 88 00:05:07,800 --> 00:05:10,240 Speaker 1: Bank of China is going to do in terms of 89 00:05:10,279 --> 00:05:14,360 Speaker 1: his multipolicy will have a big impact on the markets. 90 00:05:14,400 --> 00:05:17,600 Speaker 1: So markets are wary of that multi policy in the 91 00:05:17,680 --> 00:05:20,960 Speaker 1: belt markets has run its course. Negative age film work 92 00:05:21,120 --> 00:05:23,880 Speaker 1: at tightening isn't a good thing. They have to look 93 00:05:23,880 --> 00:05:27,440 Speaker 1: at other central bank. That's the Chinese Central Bank for them. 94 00:05:27,760 --> 00:05:30,760 Speaker 1: Ben Emmonds with this Leader Capital, Good morning everyone. Bloomberg 95 00:05:31,480 --> 00:05:35,400 Speaker 1: Surveillance were brought to you by Investco. Factor based strategies 96 00:05:35,440 --> 00:05:39,880 Speaker 1: can help investors focus on high quality, low volatility and more. 97 00:05:39,960 --> 00:05:44,480 Speaker 1: Learn more at investco dot com, slash high Conviction, invest 98 00:05:44,520 --> 00:05:50,160 Speaker 1: go I m v s CEO investco dot com slash 99 00:05:50,360 --> 00:05:54,680 Speaker 1: high Conviction. That Ben Emmonds, where are we on our theory? 100 00:05:55,160 --> 00:05:57,640 Speaker 1: We have a theory of China. We have a theory 101 00:05:57,680 --> 00:06:00,839 Speaker 1: of get twenty. We have a theory of monitory policy. 102 00:06:01,120 --> 00:06:03,360 Speaker 1: I've got a theory of negative rates with a German 103 00:06:03,400 --> 00:06:06,640 Speaker 1: two year negative zero point five seven at one point 104 00:06:07,000 --> 00:06:10,880 Speaker 1: a tenure German point one zero eight clearly heading towards 105 00:06:11,480 --> 00:06:15,159 Speaker 1: not near or at negative interest rates. Is there a 106 00:06:15,240 --> 00:06:17,240 Speaker 1: theory to what we're doing now? Are we just just 107 00:06:17,400 --> 00:06:20,760 Speaker 1: making it up as we go? Well, there's a theory 108 00:06:20,920 --> 00:06:24,240 Speaker 1: is about that. These negative rates in theory ready worked well. 109 00:06:24,440 --> 00:06:28,080 Speaker 1: But I think as you're saying, as we're kind of 110 00:06:28,120 --> 00:06:31,000 Speaker 1: assessing as we go along from here each time these 111 00:06:31,120 --> 00:06:34,479 Speaker 1: policy measures are announced. So we're going to get the 112 00:06:34,640 --> 00:06:37,599 Speaker 1: ECB on March tenth, and they have signaled the hat 113 00:06:37,640 --> 00:06:41,640 Speaker 1: that they're going to make changes to their policy, probably 114 00:06:41,680 --> 00:06:44,480 Speaker 1: more negative rates, probably more qualm than of easy. Probably 115 00:06:45,040 --> 00:06:47,599 Speaker 1: markets are kind of trying to sessimas is really going 116 00:06:47,640 --> 00:06:51,600 Speaker 1: to change things from here on? The data ultimately doesn't 117 00:06:51,680 --> 00:06:54,960 Speaker 1: does doesn't matter. I think data tonight in China be 118 00:06:55,120 --> 00:06:57,279 Speaker 1: my data as well as in the US as elsewhere, 119 00:06:57,279 --> 00:07:00,240 Speaker 1: it's going to be a big deal for my arket 120 00:07:00,240 --> 00:07:04,680 Speaker 1: direction because that's really forwardlooking data and and so far 121 00:07:04,760 --> 00:07:07,520 Speaker 1: what we've experienced a few weeks ago when the non 122 00:07:07,560 --> 00:07:11,040 Speaker 1: I s M manufacturing data in the US drop, which 123 00:07:11,080 --> 00:07:14,080 Speaker 1: is pretty sharply was a period that markets got into 124 00:07:14,120 --> 00:07:17,680 Speaker 1: a very negative environment. So I think that data really 125 00:07:17,720 --> 00:07:21,360 Speaker 1: matters and said that these policy measures that they put 126 00:07:21,400 --> 00:07:23,920 Speaker 1: in place sort of yeah, that's the theory, but the 127 00:07:24,000 --> 00:07:26,760 Speaker 1: data altimately determines that. And think that's about your article 128 00:07:26,840 --> 00:07:30,320 Speaker 1: this morning. So it's to the connection between the dots 129 00:07:30,400 --> 00:07:32,960 Speaker 1: and the markets, and there really because markets assessing the 130 00:07:33,040 --> 00:07:36,160 Speaker 1: data is very differently than the fetters. Well, of course, 131 00:07:36,520 --> 00:07:41,440 Speaker 1: the dots were you know, published in mid December. Even 132 00:07:41,760 --> 00:07:44,800 Speaker 1: FETE officials all pretty much everybody who's spoken since then 133 00:07:44,800 --> 00:07:47,880 Speaker 1: has moved away from those as it a mistake to 134 00:07:48,000 --> 00:07:52,440 Speaker 1: be still comparing, uh, you know, for for markets to 135 00:07:52,480 --> 00:07:54,480 Speaker 1: trade off the idea that the fet is wedded to 136 00:07:54,600 --> 00:07:59,480 Speaker 1: for for moves. No, that's true. I mean marks early 137 00:07:59,520 --> 00:08:02,280 Speaker 1: on already decided to say, well, you know, that's that 138 00:08:02,520 --> 00:08:06,239 Speaker 1: sounds pretty optimistic to do have four hikes this year. 139 00:08:06,600 --> 00:08:08,800 Speaker 1: Although if you take us back in you know, let's say, 140 00:08:08,880 --> 00:08:12,040 Speaker 1: since September so October, the reviews out there that the 141 00:08:12,080 --> 00:08:14,640 Speaker 1: FED would hike as much this year, there's little change 142 00:08:14,720 --> 00:08:16,800 Speaker 1: now we do this data is change and obviously it's 143 00:08:16,800 --> 00:08:19,000 Speaker 1: just said like, yeah, part of this projection is a 144 00:08:19,000 --> 00:08:21,680 Speaker 1: bit still now because of the data has changed that set. 145 00:08:21,800 --> 00:08:24,280 Speaker 1: I think markets are just looking forward to the next 146 00:08:24,320 --> 00:08:27,040 Speaker 1: points of data to look at, like, well, fat can 147 00:08:27,240 --> 00:08:29,600 Speaker 1: really be vindicated in that kind of a path. Yes, 148 00:08:29,680 --> 00:08:33,320 Speaker 1: So no marketing to judge. Yeah, that's not true, right, 149 00:08:33,520 --> 00:08:35,960 Speaker 1: You're not going to be vindicated to data simply doesn't 150 00:08:36,120 --> 00:08:39,080 Speaker 1: doesn't really match your projection. And we keep being in 151 00:08:39,120 --> 00:08:41,680 Speaker 1: this situation and it haven't really I've been in this 152 00:08:41,800 --> 00:08:45,360 Speaker 1: before of the last year, two years. We'll keep facing 153 00:08:45,400 --> 00:08:47,679 Speaker 1: this again and the fat will won't be able to 154 00:08:47,760 --> 00:08:52,120 Speaker 1: really make his projection at work. Well, right, Ben Emmon's 155 00:08:52,120 --> 00:08:54,280 Speaker 1: with this Leader Capital. I'll come back and we'll continue 156 00:08:54,280 --> 00:08:58,080 Speaker 1: this discussion, setting up the template for Monday. A little 157 00:08:58,080 --> 00:09:00,480 Speaker 1: bit of politics folded in here today as believe there's 158 00:09:00,520 --> 00:09:04,400 Speaker 1: a few elections tomorrow. Mike out on Twitter Javier bloss 159 00:09:04,440 --> 00:09:10,960 Speaker 1: with a blue, beautiful Bloomberg terminal chart Thenezuela foreign exchange reserves. 160 00:09:12,200 --> 00:09:18,520 Speaker 1: It is Selthier negative rates. I Shady almost just done 161 00:09:18,520 --> 00:09:21,720 Speaker 1: with constant foreign relations. She puts in his summer fall 162 00:09:23,080 --> 00:09:26,800 Speaker 1: is where but she said it's hugely open to debate. 163 00:09:27,000 --> 00:09:30,800 Speaker 1: The question is what's the what's the impact? UM, it's 164 00:09:30,920 --> 00:09:35,040 Speaker 1: it's so well advertised and U there the foreign trade 165 00:09:35,080 --> 00:09:38,559 Speaker 1: is so small that at this point people are sort 166 00:09:38,600 --> 00:09:41,680 Speaker 1: of like suggesting this is the best idea, which you 167 00:09:41,720 --> 00:09:46,520 Speaker 1: don't often see. Yeah, is well, but something what else? 168 00:09:46,520 --> 00:09:48,000 Speaker 1: Do you? Let me bring people up to date here 169 00:09:48,120 --> 00:09:51,560 Speaker 1: Federal mogul Uh Carlton owns about eight percent of the 170 00:09:51,600 --> 00:09:54,679 Speaker 1: company right now. He wants to buy the rest of it. Uh. 171 00:09:54,840 --> 00:09:57,720 Speaker 1: He's bidding seven dollars a share in cash. That's a 172 00:09:57,760 --> 00:10:03,360 Speaker 1: premium of were Friday's close of four dollars and cents. 173 00:10:04,360 --> 00:10:08,280 Speaker 1: The stock halted for the news at the moment, so 174 00:10:08,440 --> 00:10:10,600 Speaker 1: we'll keep you up to date on how it reacts 175 00:10:10,640 --> 00:10:14,320 Speaker 1: to that. UM. Federal Little gonna appoint a special committee 176 00:10:14,360 --> 00:10:18,560 Speaker 1: to review proposal. A major shout out Peter Armantt of 177 00:10:18,640 --> 00:10:21,599 Speaker 1: stern Angie, who made us brilliant Friday on U t 178 00:10:21,960 --> 00:10:25,319 Speaker 1: X Honeywell, that is a podcast. Michael McKee and I 179 00:10:25,360 --> 00:10:29,560 Speaker 1: are pleased to tell you free podcasts iTunes is the 180 00:10:29,559 --> 00:10:34,359 Speaker 1: best way to get them. Free podcasts iTunes are complete 181 00:10:34,400 --> 00:10:38,240 Speaker 1: programs which some people like Michael John you like to 182 00:10:38,280 --> 00:10:40,920 Speaker 1: hear all forties. Some second forty some minutes of it, 183 00:10:41,520 --> 00:10:44,959 Speaker 1: and then Yeah, and then the individual podcast is well, 184 00:10:45,040 --> 00:10:52,920 Speaker 1: including the important ut X Honeywell interview. A Friday decided 185 00:10:52,920 --> 00:10:54,400 Speaker 1: to check in with Michael byr now and get the 186 00:10:54,440 --> 00:10:57,040 Speaker 1: latest world of national headlines. Michael, Mike, Tom, thank you 187 00:10:57,160 --> 00:11:00,200 Speaker 1: very much. The day before the Super Tuesday primaries, there's 188 00:11:00,200 --> 00:11:04,080 Speaker 1: a controversy about an endorsement from Republican front runner Donald Trump, 189 00:11:04,120 --> 00:11:07,000 Speaker 1: and he is squarely in the middle. Rivals say Trump 190 00:11:07,040 --> 00:11:11,319 Speaker 1: hesitated to denounce an implicit endorsement from former Ku Klux 191 00:11:11,400 --> 00:11:15,320 Speaker 1: Klan leader David Duke. Marco Rubio and Ted Cruz both 192 00:11:15,360 --> 00:11:18,680 Speaker 1: slammed the Trump. The State Department is releasing what it's 193 00:11:18,720 --> 00:11:22,400 Speaker 1: calling the final batch of Hillary Clinton's emails. The Democratic 194 00:11:22,480 --> 00:11:25,640 Speaker 1: front runner was Secretary of State. Clinton used a private 195 00:11:25,679 --> 00:11:29,280 Speaker 1: server to handle official messages. Republican opponents say it was 196 00:11:29,320 --> 00:11:32,840 Speaker 1: a risk to national security. Spotlight one for Best Picture 197 00:11:32,840 --> 00:11:36,600 Speaker 1: at last night's Academy Awards, Leonardo DiCaprio, one for Best Actor, 198 00:11:36,679 --> 00:11:39,600 Speaker 1: Bree Larson one for Best Actress. Global It was twenty 199 00:11:39,600 --> 00:11:42,959 Speaker 1: four hours a day, powered by our hundred journalists more 200 00:11:42,960 --> 00:11:45,200 Speaker 1: than a hundred fifty news bureaus from around the world, 201 00:11:45,520 --> 00:11:48,280 Speaker 1: I'm Michael Barr. Michael Barr, thanks so much. The End 202 00:11:48,320 --> 00:11:51,040 Speaker 1: of the Risk Free Rate was Ben Emmon's important book 203 00:11:51,520 --> 00:11:54,320 Speaker 1: on the reality of how we invested. A coming up 204 00:11:54,880 --> 00:11:58,920 Speaker 1: Ben Evans of Leaders Capital on our search for the 205 00:11:59,000 --> 00:12:06,560 Speaker 1: new risk for You're right, this is Bloomberg's surveillance. Bloomberg 206 00:12:06,600 --> 00:12:08,880 Speaker 1: Surveillance is brought you by a Mercedes Benz Tri State dealer. 207 00:12:08,880 --> 00:12:10,640 Speaker 1: When it comes to winter elements, put your best four 208 00:12:10,640 --> 00:12:13,400 Speaker 1: wheels forward with Mercedes Benz Formatic All wheel Drive. Is 209 00:12:13,400 --> 00:12:15,800 Speaker 1: it your Mercedes Benz Tri State Dealer for a test 210 00:12:15,880 --> 00:12:17,200 Speaker 1: drive today?