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Speaker 1: This is Bloomberg Surveillance. I'm optimistic. I mean, I think

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Speaker 1: it's warm Buffett that has never bet against the American economy.

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Speaker 1: I think that work the markets just saying one move

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Speaker 1: a year defects saying one move for quarter. That is

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Speaker 1: a huge divergence. If you look at the unemployment rates

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Speaker 1: that exist, especially among the youth in Europe, there is

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Speaker 1: an ample supply of labor to be gotten. There is

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Speaker 1: no inflation to be found. Bloomberg Surveillance, You're linked to

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Speaker 1: the world of economics, finance, and investment on Bloomberg Radio.

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Speaker 1: Good morning everyone, Michael McKee and Tom Keane, A little

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Speaker 1: less fireworks and yesterday morning. Nevertheless, we'll give you perspective

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Speaker 1: across all of economics in this our finance and derivatives. Uh,

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Speaker 1: Julian Emmanuel will join us with you yes here in

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Speaker 1: a moment. Just lots to talk about the ramifications outcome.

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Speaker 1: Lots of kitchen sinks out on Twitter yesterday. Is that

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Speaker 1: is what it has suggested President Droggy did bloom Or

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Speaker 1: Surveillance in this hour and always brought you by cone

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Speaker 1: Resnick Accounting, Checks Advisory Trust cone Resinc. For the strategy,

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Speaker 1: the insight, your business needs to move forward. Find out

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Speaker 1: what cone Resnick thinks and sign up for Insight. Do

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Speaker 1: that at cone Resnick dot com. C O h N

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Speaker 1: R e z n I C K cone Resnick dot com.

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Speaker 1: Julie and I have never looked more forward to speaking

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Speaker 1: to you then right now. All we've done is economics

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Speaker 1: I s L M. Phillips curve economics, boring Mr Manuel

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Speaker 1: is with US Equity into Rivets Strategy UBS. How did

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Speaker 1: Mr drogg E change your world yesterday? Well, looks so

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Speaker 1: he obviously he's surprised the Buzuka was even bigger than

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Speaker 1: we expected. But you know, and and and that's a backstop,

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Speaker 1: no question about it. But he did draw lines. Uh,

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Speaker 1: you know, there are limits to how low negative rates

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Speaker 1: can actually go, but it definitely was a psychological boost.

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Speaker 1: And I think where we are in terms of the

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Speaker 1: markets and sentiment, as poor as sentiment has been since

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Speaker 1: the start of the year, what we're finding is that

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Speaker 1: positive surprises you can tend to have an asymmetric upside reaction,

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Speaker 1: and you're seeing that this morning because we had a

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Speaker 1: positive surprise on television last night when we saw a

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Speaker 1: very very reasoned, positive debate on subjects I'll let you

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Speaker 1: link that in. We're not going to do that for you. Julian,

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Speaker 1: give me an update from u b as Zurich, New York, London,

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Speaker 1: give me an update on the liquidity into the weekend.

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Speaker 1: The backdrop for President Droggy was real issues about simple liquidity,

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Speaker 1: but also some great complexities in the Julian Emmanuel world.

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Speaker 1: Is it liquid out there? Is there oil in the engine? Well,

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Speaker 1: what we saw um the first couple of months told

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Speaker 1: us that liquidity was absolutely challenged, as all assets to

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Speaker 1: correlate to one and move in lockstep. But over the

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Speaker 1: last month, particularly as data has gotten better and there's

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Speaker 1: the sense that yes there is a backstop with respect

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Speaker 1: to European financials and that in fact the US economy

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Speaker 1: it could actually be doing better than very reduced expectations.

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Speaker 1: Liquidity is coming back. It's still challenged, but it's a

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Speaker 1: gradual process. There's a question about liquidity in Europe following

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Speaker 1: the e c B. If they're gonna start buying lots

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Speaker 1: of corporates, are we're going to have a shortage of

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Speaker 1: bonds to trade in the corporate sector to go along

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Speaker 1: with the shortage we seem to have in the government sector.

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Speaker 1: It's definitely possible. I mean, those are considerations. But you know,

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Speaker 1: the psychology of of of that was something that I

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Speaker 1: think Rocky knew coming into yesterday, and it was a

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Speaker 1: calculated effort to sort of portray it as a positive

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Speaker 1: and by all rights, he seems to have succeeded. Can

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Speaker 1: I ask you there, UH, is the positive reaction we're

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Speaker 1: seeing today based on the idea that drug is doing something?

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Speaker 1: Or is it based on mathematical calculations of the impact

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Speaker 1: this will have on UH financial markets, asset prices UH

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Speaker 1: and feeding into the economy. Well it's really both. But

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Speaker 1: but if you look at it again, and we've been

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Speaker 1: saying this for a while, you really almost had a

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Speaker 1: negativity bubble in January and February. You had bad news

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Speaker 1: coming out of China volatility there, you had another leg

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Speaker 1: down in the oil markets that no one really was expecting.

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Speaker 1: Then you had weak data globally which turned in February.

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Speaker 1: And so the reality is is that in this type

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Speaker 1: of situation, particularly when earnings are still going to be

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Speaker 1: challenged on the corporate front globally, psychology is much more

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Speaker 1: important than usual. And you know, he's doing what he

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Speaker 1: feels is necessary to get psychology turned in the right direction.

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Speaker 1: Did you change your strategy? And may I expand that

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Speaker 1: Julian to say, did UBS change it's strategy of what

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Speaker 1: we saw yesterday? Not materially no um. In fact, as

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Speaker 1: you saw with the reaction in the euro. You know,

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Speaker 1: it's our view that what's being done is eventually going

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Speaker 1: to stabilize Europe and and allow it to resume a

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Speaker 1: growth trajectory. UM into the end of two thousand sixteen

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Speaker 1: and two thousand seventeen, we actually think that the euro

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Speaker 1: could trade modestly higher from here against the dollar. What

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Speaker 1: does that mean for UM equity investments in Europe? Then, well,

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Speaker 1: you know you've had this incredible divergence between defenses and

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Speaker 1: more cyclical issues, particularly banks, and obviously the whole story

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Speaker 1: about financials in Europe is going to continue to be challenged,

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Speaker 1: but it really it provides just a more favorable backdrop.

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Speaker 1: And and again we go back to this entire issue

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Speaker 1: of psychology. If you if you're providing measures that can

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Speaker 1: in effect dampen volatility and support liquidity, that's the kind

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Speaker 1: of time buying exercise that central bankers have been undertaking

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Speaker 1: essentially since two thousand and eight that that we think

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Speaker 1: succeeds and and gives room for growth. If I make

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Speaker 1: a statement Julian that the punch bowl was refilled yesterday,

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Speaker 1: what does that mean for equity markets? Obviously, it's seventeen thousand,

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Speaker 1: forty four on the futures opening up a hundred and

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Speaker 1: forty two points. Things are pretty good, saving us from

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Speaker 1: correction or bear market. But how do you link something

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Speaker 1: as historical as the punch bowl with my enthusiasm for equities. Well, well,

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Speaker 1: there's no doubt that they do have a reasonably clear linkage.

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Speaker 1: And part of the markets um anxiety has been that

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Speaker 1: the FED is the one that that is perceived to

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Speaker 1: actually be draining the punch bowl, whereas the ECB, the

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Speaker 1: Bank of Japan, the People's Bank of China are the

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Speaker 1: ones that are refilling the punch bowl. And that sort

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Speaker 1: of shoving off of responsibility is something that's unnerved people.

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Speaker 1: But at the end of the day, we still think

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Speaker 1: the SET is going to be very incremental and very

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Speaker 1: cautious about its own draining activities, and and that's an

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Speaker 1: equity supportive environment. You hear both sides of the argument

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Speaker 1: on the FED from people in the markets you hear

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Speaker 1: them say the f it's is going to be very incremental,

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Speaker 1: and then they all say, well, things are gonna be

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Speaker 1: terrible because the FED may raise rates too fast. Why

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Speaker 1: why what? Why can't people agree on what the VET

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Speaker 1: is going to do here? Is it a FEDS fault? Uh?

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Speaker 1: It is. But but there's a purposefulness in that the

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Speaker 1: set is made. It very clear since the Taper tantrum

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Speaker 1: began in May of two thousand thirteen, that this cycle

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Speaker 1: was going to be unlike any other cycle. Certainly unlike

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Speaker 1: the oh four to oh six rate hike cycle where

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Speaker 1: you went once at every consecutive meeting, seventeen meetings, and

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Speaker 1: volatility was very low. This is a different time. We've

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Speaker 1: never come off of the zero interest rate bound. It's

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Speaker 1: never been done successfully in the history of modern finance.

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Speaker 1: So the stead needs the flexibility. But the message that

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Speaker 1: said sent out in the in the January Minutes um

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Speaker 1: mentioning the word uncertainty nineteen times, you know, very historic,

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Speaker 1: is something that says to investors we are going to

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Speaker 1: continue to air on the side of cautions. They know

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Speaker 1: how to fight in my keyword yesterday and I having

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Speaker 1: a luxury talking to your colleague Paul Donovan was the

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Speaker 1: word horizon, which is, you know, Julian has all sorts

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Speaker 1: of mathematical and physics connotations. MARYA. Droggs looking out to

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Speaker 1: a horizon and then beyond it, do I do what

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Speaker 1: I do with my money? Knowing that Mario Draggy can't

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Speaker 1: even see the horizon X number of years out, can

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Speaker 1: I have a newer confidence off of yesterday? Uh? It is.

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Speaker 1: It is something that's going to take time, Tom and

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Speaker 1: and that's that's part of this entire equation. Central bankers

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Speaker 1: consistently since two thousands and eight have been buying time

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Speaker 1: for investor psychology to improve, for economic fundamentals to improve.

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Speaker 1: And what we're finding in a post debt crisis environment

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Speaker 1: is that it's a very difficult, drawn out process, but

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Speaker 1: it is going to succeed. No, this is great, Julian Emmanuel.

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Speaker 1: This will come back and talk about specifics of the

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Speaker 1: market as well. Mike. I love how we're looking at economics,

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Speaker 1: and then you've got a guy like Mr Manuel looking

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Speaker 1: at much more over towards what I'll call applied investment,

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Speaker 1: Like what do you actually do? What do you actually do?

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Speaker 1: With all the international economics we saw yesterday. I I again, folks,

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Speaker 1: Catherine man this more was blistering in her support of Mr. Drug.

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Speaker 1: She meants no words about it, that that this was

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Speaker 1: done with intellectual courage and with a real conviction of

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Speaker 1: where he wants Europe to be. Almost Mike is a

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Speaker 1: surrogate fiscal authority. Well, that's uh, that is true. That's

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Speaker 1: one of the criticisms of central banks these days is yeah,

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Speaker 1: have they gone too far in that direction? There's no

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Speaker 1: question about that. Let's do a day to check here

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Speaker 1: on a Friday, Green on the screen up nineteen. Delfeas

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Speaker 1: is up seven two percent in view one up two

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Speaker 1: basis points and the year O a little bit of

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Speaker 1: a bit in the last twenty minutes one eleven oh two,

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Speaker 1: yen one thtight one euro yen one six h thirty

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Speaker 1: five off the Bloomberg. Have to check in with Michael

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Speaker 1: Byer now and get the latest world of national headlines. Michael, Mike, Tom,

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Speaker 1: thank you very much. Mourners will say their final goodbyes

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Speaker 1: today to Ancy Reagan, the former First Lady, will be

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Speaker 1: buried today next to her husband, who she adoringly called

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Speaker 1: my Ronnie, at the Reagan Presidential Library and Simi Valley, California.

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Speaker 1: About a thousand guests have been invited to today's general,

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Speaker 1: including former President George W. Bush. Reagan's two children will

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Speaker 1: give remarks, along with former NBC News anchor John Brokaw

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Speaker 1: and James Baker, who was with the Reagan administration. Donald

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Speaker 1: Trump says he has picked up the endorsement of former

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Speaker 1: rival Ben Carson. Trump made the announcement during the last

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Speaker 1: night's Republican presidential debate in Miami. The weekend strike deadline

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Speaker 1: as approaching for more than four thousand New Jersey Transit

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Speaker 1: rail workers. New Jersey Transit special Console says key issues

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Speaker 1: such as wages and healthcare remained in play. Global News

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Speaker 1: twenty four hours a day, powered by our twenty four

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Speaker 1: hundred journalists and more than one hundred fifty news bureaus

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Speaker 1: from around the world. I'm Michael Barr, Mike Tom Nichol Bar,

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Speaker 1: Thanks so much, Julian Emmanuel. This with the UBS as

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Speaker 1: we look at the effect. Yesterday's enough by Mr Drug.

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