1 00:00:03,640 --> 00:00:07,040 Speaker 1: This is Bloomberg Surveillance and say that there's not even 2 00:00:07,040 --> 00:00:09,239 Speaker 1: a fifty fifty chance that the Federates rates by the 3 00:00:09,320 --> 00:00:12,200 Speaker 1: end of the year, I think is a gross underestimation 4 00:00:12,320 --> 00:00:14,360 Speaker 1: of the U S economy. I think the strong dollar 5 00:00:14,480 --> 00:00:17,599 Speaker 1: story still holds. It's just a question of really, what's 6 00:00:17,640 --> 00:00:21,120 Speaker 1: the broad macro thematic that's driving it. We are believing 7 00:00:21,160 --> 00:00:24,400 Speaker 1: that there is a global recession, meaning the global economy 8 00:00:24,480 --> 00:00:27,400 Speaker 1: is growing at slower than potential. Absolutely no question about it. 9 00:00:27,480 --> 00:00:31,720 Speaker 1: Bloomberg Surveillance your link to the world of economics, finance, 10 00:00:31,800 --> 00:00:36,479 Speaker 1: and investment on Bloomberg Radio. Good morning, Michael McKee. It 11 00:00:36,560 --> 00:00:40,320 Speaker 1: is seven am on Wall Street. It's six am in Cushing, Oklahoma, 12 00:00:40,400 --> 00:00:43,560 Speaker 1: where all that oil in storage tanks is worth more 13 00:00:43,760 --> 00:00:47,040 Speaker 1: this morning, and that has investors in a much better mood. 14 00:00:47,040 --> 00:00:50,360 Speaker 1: Will it last well? That is our question on Surveillance 15 00:00:50,440 --> 00:00:53,800 Speaker 1: this morning. West Texas Intermediate is at twenty seven dollars 16 00:00:53,840 --> 00:00:57,040 Speaker 1: and fifty two cents. That's a five percent gain over 17 00:00:57,120 --> 00:01:03,120 Speaker 1: yesterday's close. Bret Crude also up by five percent, and 18 00:01:03,200 --> 00:01:07,760 Speaker 1: that has equity investors smiling or at least buying stock. 19 00:01:07,880 --> 00:01:10,880 Speaker 1: Six hundred is up six points in Europe right now. 20 00:01:10,920 --> 00:01:13,200 Speaker 1: That is a two percent gain on the day. The 21 00:01:13,280 --> 00:01:16,200 Speaker 1: docks is up a hundred and fifty one points on 22 00:01:16,240 --> 00:01:19,399 Speaker 1: the day one and three quarters percent. The CAC forty 23 00:01:19,440 --> 00:01:22,480 Speaker 1: in Paris up fifty eight points one point four percent. 24 00:01:22,800 --> 00:01:27,000 Speaker 1: European GDP comes in as forecast, a three tense gain 25 00:01:27,120 --> 00:01:32,080 Speaker 1: one one point five percent gain for the year, which 26 00:01:32,280 --> 00:01:35,120 Speaker 1: is the equivalent to forecast, but does show that the 27 00:01:35,120 --> 00:01:38,840 Speaker 1: European economy is not rolling over the US economy apparently 28 00:01:38,840 --> 00:01:41,440 Speaker 1: not rolling over either, at least that's the mood this morning. 29 00:01:41,760 --> 00:01:44,720 Speaker 1: S ANDP features up by twenty points one point one percent. 30 00:01:44,800 --> 00:01:47,680 Speaker 1: Down features a hundred and forty nine points higher. We'll 31 00:01:47,720 --> 00:01:51,160 Speaker 1: call that one percent as well, and NASDAC one emning 32 00:01:51,200 --> 00:01:54,440 Speaker 1: features up forty four points, that is a one point 33 00:01:54,800 --> 00:01:59,600 Speaker 1: one percent gain. As we see stocks rise, we watch 34 00:02:00,240 --> 00:02:03,280 Speaker 1: fall and yields move higher one point six nine percent. 35 00:02:03,440 --> 00:02:06,160 Speaker 1: Your tenure note yield the five year one point one 36 00:02:06,360 --> 00:02:09,680 Speaker 1: five percent and sixty five basis points for the two years. 37 00:02:09,720 --> 00:02:14,000 Speaker 1: The whole curve still somewhat depressed. German two year notes 38 00:02:14,919 --> 00:02:18,400 Speaker 1: rising as well. The yield is now fifty four negative 39 00:02:18,440 --> 00:02:22,400 Speaker 1: fifty four basis points, and we have seen currencies turn 40 00:02:22,600 --> 00:02:25,400 Speaker 1: as well. The dollar index a little bit higher this 41 00:02:25,440 --> 00:02:30,320 Speaker 1: morning point seven five six. The yen is a little 42 00:02:30,360 --> 00:02:34,240 Speaker 1: bit uh stronger other day one twelve fifty eight, the 43 00:02:34,280 --> 00:02:37,680 Speaker 1: euro a little weaker, one twelve seventy nine pound going 44 00:02:37,720 --> 00:02:42,400 Speaker 1: for one forty five thirty seven tub. Yeah, good morning, Michael. 45 00:02:42,400 --> 00:02:44,040 Speaker 1: You're right, it's a little green on the screen I 46 00:02:44,120 --> 00:02:46,840 Speaker 1: just looked for. Let me do this Bloomberg surveillance on 47 00:02:46,880 --> 00:02:50,520 Speaker 1: this Friday, brought you by invest Goo. Investing isn't about 48 00:02:50,560 --> 00:02:55,000 Speaker 1: meeting benchmarks, it's about achieving goals. Find out how invest 49 00:02:55,040 --> 00:03:00,320 Speaker 1: goes high conviction approach can help. Visit investco dot com 50 00:03:00,400 --> 00:03:04,600 Speaker 1: slash high Conviction. Michael, Well, you were going through the 51 00:03:04,720 --> 00:03:07,880 Speaker 1: very deserved and true optimism that's out there. I just 52 00:03:07,919 --> 00:03:10,880 Speaker 1: put up a fancy chart of the SMP, putting it 53 00:03:10,919 --> 00:03:14,600 Speaker 1: out on Bloomberg Radio Plus, and it's amazing with an 54 00:03:14,639 --> 00:03:21,160 Speaker 1: eighteen nine clothes and futures up twenty eight five. How 55 00:03:21,240 --> 00:03:25,560 Speaker 1: much further we have to go to begin to diminish 56 00:03:25,680 --> 00:03:31,440 Speaker 1: the technical damage starting honor about February four. I mean, 57 00:03:31,520 --> 00:03:35,720 Speaker 1: it's amazing the carnage of the last couple of days. 58 00:03:35,720 --> 00:03:38,160 Speaker 1: We see that in the equity markets, and Michael um 59 00:03:38,520 --> 00:03:41,720 Speaker 1: the same risk on feel in the foreign exchange markets, 60 00:03:41,840 --> 00:03:45,320 Speaker 1: which brings us to Jane Foley of Rubble Bank. Yeah, 61 00:03:45,360 --> 00:03:48,800 Speaker 1: it's obviously we get the quickest reaction it turns in 62 00:03:48,880 --> 00:03:50,880 Speaker 1: the markets in for an exchange. And so Jay and 63 00:03:50,920 --> 00:03:54,400 Speaker 1: I should ask you what happens next? But given the 64 00:03:54,440 --> 00:03:57,200 Speaker 1: crazy volatility we've seen this year so far, I guess 65 00:03:57,240 --> 00:04:01,040 Speaker 1: the real question is, how would you know what happens next? Well, exactly, 66 00:04:01,120 --> 00:04:03,040 Speaker 1: and I think we have some sort of clue next week, 67 00:04:03,040 --> 00:04:05,080 Speaker 1: when of course China comes back from its lunar New 68 00:04:05,160 --> 00:04:08,600 Speaker 1: Year holiday. Now, of course the Chinese stock markets widely 69 00:04:08,640 --> 00:04:11,640 Speaker 1: expected to open lower, but beyond that, what sort of 70 00:04:11,680 --> 00:04:14,240 Speaker 1: signal are they going to give us? No. One positive 71 00:04:14,440 --> 00:04:16,720 Speaker 1: for China that you could argue is the fact that 72 00:04:16,760 --> 00:04:19,880 Speaker 1: that what the dollar has come off, it's it's recent highs. 73 00:04:19,880 --> 00:04:22,760 Speaker 1: And what's that is painful for central banks such as 74 00:04:22,800 --> 00:04:26,120 Speaker 1: the Bank of Japan and the ECB, actually very welcome 75 00:04:26,279 --> 00:04:29,920 Speaker 1: for the Chinese because it means that their effective exchange rate, 76 00:04:29,960 --> 00:04:32,760 Speaker 1: which of course that their their coaches are defected peg 77 00:04:32,800 --> 00:04:36,040 Speaker 1: against the dollar. So whilst the dollar comes lower, so 78 00:04:36,279 --> 00:04:39,080 Speaker 1: does the effective exchange rate of China. So they have 79 00:04:39,160 --> 00:04:42,239 Speaker 1: at least a little bit of hope that should relieve 80 00:04:42,320 --> 00:04:45,240 Speaker 1: some of the pressure or some of the speculation that 81 00:04:45,279 --> 00:04:47,640 Speaker 1: they needed to devalue against it the U S dollars. 82 00:04:47,640 --> 00:04:50,840 Speaker 1: So that's going to be an interesting contrast I think 83 00:04:51,800 --> 00:04:55,839 Speaker 1: next week. But but certainly how the Chinese markets open 84 00:04:55,880 --> 00:04:58,240 Speaker 1: after the lu New New Year is likely to provide 85 00:04:58,240 --> 00:05:01,440 Speaker 1: the next set of signals for for global markets. It's 86 00:05:01,440 --> 00:05:03,560 Speaker 1: a very interesting point because everything that's happened this week 87 00:05:03,560 --> 00:05:08,479 Speaker 1: has happened without the Chinese involved. Do we normally see 88 00:05:09,160 --> 00:05:12,800 Speaker 1: distorted moves in Chinese markets after they come back from 89 00:05:12,800 --> 00:05:15,640 Speaker 1: the Long Lunar New York holiday because they've been away? 90 00:05:15,680 --> 00:05:17,360 Speaker 1: I mean, are we're gonna be able to take whatever 91 00:05:17,400 --> 00:05:21,560 Speaker 1: happens Monday as any kind of actual sign No. I 92 00:05:21,640 --> 00:05:23,960 Speaker 1: think first and foremost that they will pay cat chap. 93 00:05:24,040 --> 00:05:26,920 Speaker 1: And of course we saw that in Japanese sorry Hong 94 00:05:27,000 --> 00:05:30,320 Speaker 1: Kong markets when they opened yesterday, Hong Kong Hang sanger 95 00:05:30,320 --> 00:05:34,440 Speaker 1: because sank much lower. There was a movement back into 96 00:05:34,440 --> 00:05:36,120 Speaker 1: the yen on the back of that, maps on the 97 00:05:36,120 --> 00:05:39,040 Speaker 1: back of tensions in Korea too. And it will be 98 00:05:39,080 --> 00:05:43,919 Speaker 1: interesting to see is the Chinese stock markets open below 99 00:05:44,000 --> 00:05:46,520 Speaker 1: where people expect them to. Certainly they will open downs 100 00:05:46,680 --> 00:05:48,720 Speaker 1: as a catch up movement. Are they going to provide fresh, 101 00:05:48,800 --> 00:05:52,039 Speaker 1: fresh signals or not? What is your observation off the 102 00:05:52,080 --> 00:05:54,080 Speaker 1: desk chain? The reason we speak to you as you've 103 00:05:54,120 --> 00:05:57,760 Speaker 1: got a strange purview at rabble bank where you you know, 104 00:05:57,920 --> 00:06:01,000 Speaker 1: you see the trading, the hedging, it's going on, things 105 00:06:01,040 --> 00:06:04,600 Speaker 1: away from the media hysteria about foreign exchange. What is 106 00:06:04,640 --> 00:06:07,919 Speaker 1: your observation of this week? Well, I think you know 107 00:06:07,960 --> 00:06:11,719 Speaker 1: the observation this week. I think we've seen really coming 108 00:06:11,760 --> 00:06:14,440 Speaker 1: together of an awful lot of worries that many analysts 109 00:06:14,440 --> 00:06:16,920 Speaker 1: have been talking about really for some time. And quite simply, 110 00:06:16,920 --> 00:06:20,080 Speaker 1: if we look at the stock market correction, many analysts 111 00:06:20,120 --> 00:06:22,839 Speaker 1: were saying two years ago that the rallying in global 112 00:06:22,920 --> 00:06:26,839 Speaker 1: stocks was was not was was becoming disjointed relative to 113 00:06:26,880 --> 00:06:29,960 Speaker 1: market fundamentals. And now it seems that an equity markets 114 00:06:29,960 --> 00:06:32,680 Speaker 1: asset prices perhaps of waking up to the fact that 115 00:06:33,040 --> 00:06:35,440 Speaker 1: cheap money is not a cure or for all of 116 00:06:35,480 --> 00:06:39,279 Speaker 1: the world's ills. We are here still with low inflation 117 00:06:39,520 --> 00:06:43,080 Speaker 1: in most developed economies, slow growth, and what's going to 118 00:06:43,160 --> 00:06:47,840 Speaker 1: happen next It's it's not a particularly happy outlook. Then again, 119 00:06:48,240 --> 00:06:51,000 Speaker 1: we've got to be careful not to talk ourselves into 120 00:06:51,720 --> 00:06:54,600 Speaker 1: a cycle of gloom, because there are better signs out 121 00:06:54,600 --> 00:06:56,680 Speaker 1: there in terms of there is growth still in the 122 00:06:56,760 --> 00:06:59,159 Speaker 1: U s economy, there is growth in the UK economy, 123 00:06:59,680 --> 00:07:02,320 Speaker 1: and we really must be aware of the better signs 124 00:07:02,360 --> 00:07:06,480 Speaker 1: that we have as well. Do you require government leadership 125 00:07:06,560 --> 00:07:11,160 Speaker 1: now and coordinated action or is that premature? Well even 126 00:07:11,280 --> 00:07:15,600 Speaker 1: one I'm in same for a while that governments, I think, uh, 127 00:07:15,800 --> 00:07:18,239 Speaker 1: particular in Europe, where we have of course in so 128 00:07:18,240 --> 00:07:21,520 Speaker 1: soon we're just sort of recovering really from the crisis 129 00:07:21,560 --> 00:07:24,880 Speaker 1: in the Aurozone, governments have to pay a really important 130 00:07:24,920 --> 00:07:27,160 Speaker 1: part in what we've seen over the last couple of 131 00:07:27,240 --> 00:07:30,120 Speaker 1: years or the and a half, particularly in Europe, is 132 00:07:30,160 --> 00:07:32,720 Speaker 1: a move towards the far left and a move towards 133 00:07:32,720 --> 00:07:35,559 Speaker 1: the far right, which is a protest against austerity. People 134 00:07:35,560 --> 00:07:38,640 Speaker 1: getting very tired with austerity, people getting very tired of 135 00:07:38,680 --> 00:07:41,400 Speaker 1: wealth in equality, income in equality, those sorts of themes. 136 00:07:41,480 --> 00:07:43,440 Speaker 1: And I think over the next five years or so, 137 00:07:44,320 --> 00:07:46,800 Speaker 1: there is going to be movements in governments in a 138 00:07:46,880 --> 00:07:49,600 Speaker 1: response to the to the fact that the effects of 139 00:07:49,600 --> 00:07:54,040 Speaker 1: the global financial crisis are still being felt in people's pockets. 140 00:07:55,000 --> 00:07:59,720 Speaker 1: Do we now look to the as terms as that 141 00:07:59,840 --> 00:08:03,520 Speaker 1: the governments or at least the central banks to bail 142 00:08:03,640 --> 00:08:08,240 Speaker 1: us out or have the markets lost faith in their 143 00:08:08,280 --> 00:08:10,760 Speaker 1: ability to do that or is it too soon to tell. 144 00:08:11,480 --> 00:08:13,600 Speaker 1: I think the markets certainly are losing faith. I mean, 145 00:08:13,640 --> 00:08:15,800 Speaker 1: a couple of years ago, it seems of cheap money, 146 00:08:15,920 --> 00:08:18,080 Speaker 1: you know, was going to be the answer to all 147 00:08:18,120 --> 00:08:22,239 Speaker 1: our pres And and now, just far from the financial crisis, 148 00:08:22,680 --> 00:08:26,080 Speaker 1: markets are beginning to speculate that there really is run 149 00:08:26,200 --> 00:08:28,040 Speaker 1: at the center banks and running out of road, that 150 00:08:28,120 --> 00:08:31,720 Speaker 1: interest rates pretty much on the floor, that quantita easing 151 00:08:31,800 --> 00:08:34,319 Speaker 1: has its problems, that can create problems as well as 152 00:08:34,600 --> 00:08:37,840 Speaker 1: alleviate some And therefore where does central banks go from now? 153 00:08:37,880 --> 00:08:40,640 Speaker 1: And and that sort of attitude really is is really 154 00:08:41,200 --> 00:08:46,440 Speaker 1: very dangerous because here we are with record levels of 155 00:08:46,559 --> 00:08:49,319 Speaker 1: monetary policy stimulus and a huge amount of keep money, 156 00:08:49,520 --> 00:08:51,880 Speaker 1: and yet we don't have inflation. So what is going 157 00:08:51,920 --> 00:08:54,640 Speaker 1: to going to bring some of these price pishes and 158 00:08:54,880 --> 00:08:57,840 Speaker 1: bring some demand. It's very difficult to know, Jane. The 159 00:08:57,880 --> 00:09:01,840 Speaker 1: American philosopher Douglas care is quoting Byron Ween this morning, 160 00:09:02,360 --> 00:09:07,080 Speaker 1: the acclaimed market observer, Mr Ween quote, disasters have a 161 00:09:07,120 --> 00:09:11,040 Speaker 1: way of not happening can you be optimistic Arthur, Rabble 162 00:09:11,080 --> 00:09:15,560 Speaker 1: Bank desk this morning? Are you still under the proverbial desk? Well, 163 00:09:15,760 --> 00:09:18,240 Speaker 1: you know, I think it is important that we do 164 00:09:18,400 --> 00:09:21,880 Speaker 1: look at the positives here because I think over the 165 00:09:21,920 --> 00:09:24,880 Speaker 1: last few months, in particular, we have made in the 166 00:09:24,880 --> 00:09:27,800 Speaker 1: markets as a whole have concentrated on the risks on 167 00:09:27,840 --> 00:09:30,160 Speaker 1: the down sides. The fact of the matter is that 168 00:09:30,200 --> 00:09:33,760 Speaker 1: he was employed. Unemployment is below. The fact of the 169 00:09:33,800 --> 00:09:36,160 Speaker 1: matter is that there are some signs of wage growth. 170 00:09:36,160 --> 00:09:38,480 Speaker 1: The fact of the matter is that the services sector 171 00:09:39,120 --> 00:09:43,640 Speaker 1: is growing well. Similar in the UK too, there is 172 00:09:43,720 --> 00:09:46,760 Speaker 1: growth in the EU Zone. So I think it's important 173 00:09:46,800 --> 00:09:52,040 Speaker 1: perhaps to remind ourselves that there are positives as well. Jane, 174 00:09:52,160 --> 00:09:54,439 Speaker 1: thank you so much, particularly thank you for your coverage 175 00:09:54,440 --> 00:09:58,560 Speaker 1: through the last attend. She is with Rabble Bank. Coming 176 00:09:58,640 --> 00:10:00,840 Speaker 1: up Stephen Major of HSB, you see, will speak to 177 00:10:00,920 --> 00:10:03,600 Speaker 1: him about a yield of one point six seven percent. 178 00:10:03,640 --> 00:10:06,240 Speaker 1: Of course we had a one fifty hand. That has 179 00:10:06,280 --> 00:10:09,839 Speaker 1: been his arch call, his outlier major bank call. Steve 180 00:10:09,920 --> 00:10:14,240 Speaker 1: Major has been of most interest here with an exceptionally 181 00:10:14,280 --> 00:10:17,720 Speaker 1: cautious view on global aggregate demand and how it folds 182 00:10:17,760 --> 00:10:22,600 Speaker 1: over into equities, bonds, currencies, commodities is Michael mentioned not 183 00:10:22,679 --> 00:10:25,720 Speaker 1: only risk on, but more risk on. In the last hour, 184 00:10:26,160 --> 00:10:31,880 Speaker 1: West Texas twenty forty Brent crude positively lofty up a 185 00:10:31,920 --> 00:10:35,640 Speaker 1: dollar forty two, and even gold on a tear finally 186 00:10:35,679 --> 00:10:37,120 Speaker 1: gives it up. I don't want to make too much 187 00:10:37,120 --> 00:10:39,680 Speaker 1: of it, but I'll take down nine dollars. The announced 188 00:10:39,720 --> 00:10:42,959 Speaker 1: twelve thirty nine, the announced to be something yeah one 189 00:10:43,040 --> 00:10:47,640 Speaker 1: twelve uh and again futures up, twenty down, futures up 190 00:10:48,120 --> 00:10:53,920 Speaker 1: a hundred and forty five, seven ten on all straight. 191 00:10:53,920 --> 00:10:55,400 Speaker 1: Time to check out with Michael Barr and get the 192 00:10:55,440 --> 00:10:58,040 Speaker 1: latest world of national headlines. Michael, Mike, Tom, thank you 193 00:10:58,120 --> 00:11:02,439 Speaker 1: very much. Diplomats agreed today to accelerate and expand deliveries 194 00:11:02,480 --> 00:11:06,480 Speaker 1: of humanitarian aide who besieged Syrian communities beginning this week. 195 00:11:06,880 --> 00:11:10,240 Speaker 1: They also agreed to work toward a temporary cessation of 196 00:11:10,320 --> 00:11:13,600 Speaker 1: hostilities in Syria civil war, but the main goal of 197 00:11:13,679 --> 00:11:18,800 Speaker 1: lasting ceasefire eluded. Foreign ministers from the International Syria Support 198 00:11:18,880 --> 00:11:22,360 Speaker 1: Group meeting in Germany. The World Health Organization say as 199 00:11:22,400 --> 00:11:24,760 Speaker 1: it will be weeks to a few months before a 200 00:11:24,880 --> 00:11:28,040 Speaker 1: firm link can be established between the Zeka virus and 201 00:11:28,200 --> 00:11:31,720 Speaker 1: abnormally small heads and newborn children, but it appears the 202 00:11:31,760 --> 00:11:35,199 Speaker 1: connection is more and more probable. The w h O 203 00:11:35,320 --> 00:11:38,320 Speaker 1: also says a zeke of vaccine is at least eighteen 204 00:11:38,320 --> 00:11:41,720 Speaker 1: months away. New York City police officer Peter Leang has 205 00:11:41,760 --> 00:11:44,920 Speaker 1: been convicted of manslaughter in the fourteen shooting death of 206 00:11:44,960 --> 00:11:48,559 Speaker 1: a Kai Gurley and a dark public housing stairwell. Global 207 00:11:48,600 --> 00:11:51,520 Speaker 1: News twenty four hours a day, powered by our two 208 00:11:51,760 --> 00:11:55,439 Speaker 1: d journalists. I'm Michael Barr, Mike, Tom, Michael, thanks so much, 209 00:11:55,440 --> 00:11:58,240 Speaker 1: greatly appreciated again. Green on the Screen. Futures Up twenty 210 00:11:58,320 --> 00:12:01,640 Speaker 1: stay with a Stephen Major of HSBC. The yield one 211 00:12:01,679 --> 00:12:07,000 Speaker 1: point six nine percent. Bloomberg's advalance brought to you by 212 00:12:07,040 --> 00:12:09,160 Speaker 1: your Mercedes Benz Tri State Dealer. When it comes to 213 00:12:09,160 --> 00:12:11,600 Speaker 1: winter elements, put your best four wheels forward with Mercedes 214 00:12:11,640 --> 00:12:14,080 Speaker 1: Benz formaticall wheel Drive. Is it your Mercedes Benz Tri 215 00:12:14,200 --> 00:12:23,480 Speaker 1: State Dealer or a test drive today? Global Business News 216 00:12:23,559 --> 00:12:26,480 Speaker 1: twenty four hours a day at Bloomberg dot Com, the 217 00:12:26,600 --> 00:12:29,679 Speaker 1: Radio plus mobile app and on your radio. This is 218 00:12:29,720 --> 00:12:33,360 Speaker 1: a Bloomberg Business Flash and I'm Karen Moscow. This updates 219 00:12:33,360 --> 00:12:36,240 Speaker 1: brought to you by National Realty returns on cash and 220 00:12:36,240 --> 00:12:38,240 Speaker 1: rented real estate. Find them at n r I, a 221 00:12:38,559 --> 00:12:41,760 Speaker 1: dot net. Global equities are showing signs of a rest 222 00:12:41,760 --> 00:12:44,599 Speaker 1: spent after a turbulent week, with European stocks rising. So 223 00:12:44,760 --> 00:12:47,600 Speaker 1: are u S stock index futures and oil advancing from 224 00:12:47,600 --> 00:12:50,240 Speaker 1: a twelve year low. We checked the markets every fifteen 225 00:12:50,280 --> 00:12:53,720 Speaker 1: minutes throughout the trading day on Bloomberg. Snpe mini futures 226 00:12:53,720 --> 00:12:56,680 Speaker 1: of nineteen points, DOWI mini futures up a hundred forty two, 227 00:12:57,040 --> 00:12:59,319 Speaker 1: Nas DOCU many futures at forty one. The Dacks in 228 00:12:59,360 --> 00:13:02,280 Speaker 1: Germany is up one point seven percent ten. Your treasury 229 00:13:02,280 --> 00:13:05,040 Speaker 1: down five thirty seconds, the yeld one point six seven percent, 230 00:13:05,440 --> 00:13:07,559 Speaker 1: NIMEX forred oil at four and a half percent, or 231 00:13:07,600 --> 00:13:10,040 Speaker 1: a dollar seventeen to twenty seven thirty eight a barrel 232 00:13:10,280 --> 00:13:12,959 Speaker 1: comes goal down seven ten percent or nine dollars ten 233 00:13:13,000 --> 00:13:15,800 Speaker 1: cents at twelve thirty eight seventy announced the euro a 234 00:13:15,840 --> 00:13:18,760 Speaker 1: dollar twelve seventy five again one twelve point six eight. 235 00:13:18,960 --> 00:13:22,520 Speaker 1: That's a Bloomberg business flash. Tom and Mike Karen, thanks 236 00:13:22,520 --> 00:13:24,680 Speaker 1: so much. We have had any number of good people 237 00:13:25,559 --> 00:13:29,360 Speaker 1: who have predicted low interest rates, but it's much different 238 00:13:29,400 --> 00:13:32,839 Speaker 1: when you're at a major bank. Stephen Major works for HSBC, 239 00:13:33,040 --> 00:13:35,840 Speaker 1: which is decidedly a major bank, and he joins us 240 00:13:35,880 --> 00:13:39,280 Speaker 1: town Stephen Major, which give us one vignette of grief 241 00:13:39,400 --> 00:13:42,880 Speaker 1: you put up with when you called for lower interest rates. 242 00:13:42,920 --> 00:13:48,160 Speaker 1: Just give us one story. They're all quite a few, right. 243 00:13:48,720 --> 00:13:53,880 Speaker 1: It struck me that the defender of shock. And the 244 00:13:53,920 --> 00:13:57,480 Speaker 1: first thing that people say is have you made some 245 00:13:57,559 --> 00:14:01,280 Speaker 1: kind of misprint? Yeah, that the wrong number, so that 246 00:14:01,640 --> 00:14:04,920 Speaker 1: I have had calls to that effect, Tom, But most 247 00:14:04,920 --> 00:14:07,839 Speaker 1: people ask, why do you have a bondy of that 248 00:14:08,000 --> 00:14:12,440 Speaker 1: below your nominal GDP forecast? That is the classic response. 249 00:14:12,720 --> 00:14:15,160 Speaker 1: I like that, And and the fact is nominal GDP 250 00:14:15,440 --> 00:14:18,360 Speaker 1: is let's say it's six down to four percent down 251 00:14:18,360 --> 00:14:23,360 Speaker 1: below that. Why was a one fifty below where nominal is? Well, 252 00:14:23,400 --> 00:14:27,200 Speaker 1: the thing is, it's structural factors that determine where the 253 00:14:27,320 --> 00:14:30,520 Speaker 1: ten year rate will be, and it is a ten 254 00:14:30,600 --> 00:14:34,520 Speaker 1: year rate. It's a complex weighted average of discounted cash 255 00:14:34,560 --> 00:14:37,720 Speaker 1: prows FAC to present value. Right, So it's not about 256 00:14:37,840 --> 00:14:41,760 Speaker 1: the forecast for GDP this year and next year, because 257 00:14:41,760 --> 00:14:45,120 Speaker 1: a year on year GDP move is not the same 258 00:14:45,160 --> 00:14:47,920 Speaker 1: as a ten year rate, is it. So so the 259 00:14:47,920 --> 00:14:53,600 Speaker 1: the structural factors, the long term things like death overhang, um, 260 00:14:53,640 --> 00:14:57,280 Speaker 1: if you like demographics. These factors are what drive bondy 261 00:14:57,320 --> 00:15:01,480 Speaker 1: of not the short term cyclical patterns. And I think 262 00:15:01,560 --> 00:15:06,640 Speaker 1: the FED and others have probably been underestimating the importance 263 00:15:06,640 --> 00:15:09,680 Speaker 1: of the longer term drivers of bond markets. Well, that's 264 00:15:10,320 --> 00:15:12,520 Speaker 1: sounds a lot like grad Dally I was suggesting we're 265 00:15:12,560 --> 00:15:18,040 Speaker 1: at the end of a long term bond market cycle. Well, 266 00:15:18,200 --> 00:15:21,440 Speaker 1: I don't know whether that's the case. I think all 267 00:15:21,480 --> 00:15:26,000 Speaker 1: the evidence is there for negative rates to be pushed 268 00:15:26,040 --> 00:15:30,600 Speaker 1: even further. And there's a fairly self serving commentary building 269 00:15:31,000 --> 00:15:34,400 Speaker 1: against negative rates. You have to be careful with that. 270 00:15:34,720 --> 00:15:37,800 Speaker 1: I mean, obviously it doesn't do anybody any good. Turkeys 271 00:15:37,800 --> 00:15:41,120 Speaker 1: don't vote for Christmas, do they. But the reality is 272 00:15:41,320 --> 00:15:44,840 Speaker 1: that we've got negative rates in large parts of the world, 273 00:15:45,040 --> 00:15:49,120 Speaker 1: and the FED has included negative rates in the adverse 274 00:15:49,400 --> 00:15:52,960 Speaker 1: Pross test scenario published twenty eight January. I was shocked 275 00:15:53,000 --> 00:15:55,160 Speaker 1: in America last week. Tom. I think I might have 276 00:15:55,240 --> 00:15:58,800 Speaker 1: told you that most of the people I met hadn't 277 00:15:58,840 --> 00:16:02,160 Speaker 1: actually read the ten or twelve pages of bed stress 278 00:16:02,240 --> 00:16:05,120 Speaker 1: tests under Dodge Brank. And that tells you all you 279 00:16:05,160 --> 00:16:07,920 Speaker 1: need to know it will never happen to us. It 280 00:16:07,960 --> 00:16:12,479 Speaker 1: will never happen. The Fed gets it. They've got the scenarios. 281 00:16:12,600 --> 00:16:15,400 Speaker 1: They just can't come out and say it directly. Well, 282 00:16:15,400 --> 00:16:18,359 Speaker 1: what happened to see what will happen to our listeners 283 00:16:18,440 --> 00:16:21,640 Speaker 1: in their fixed income instruments if we drive to greater 284 00:16:21,800 --> 00:16:27,440 Speaker 1: netive negative rates, if we test the theory, Well, it 285 00:16:27,520 --> 00:16:31,440 Speaker 1: says to me, don't let go of duration, because if 286 00:16:31,520 --> 00:16:35,120 Speaker 1: you sell your long dated bonds you might have trouble 287 00:16:35,120 --> 00:16:38,320 Speaker 1: getting them back later on. So you you hang on 288 00:16:38,680 --> 00:16:42,760 Speaker 1: to longer data securities with a good duration. And I 289 00:16:42,800 --> 00:16:44,760 Speaker 1: think that we have to be agnostic how we look 290 00:16:44,760 --> 00:16:48,640 Speaker 1: at duration rather than saying I can't buy that bond 291 00:16:48,720 --> 00:16:51,600 Speaker 1: because the yields. To look at the bond as being 292 00:16:52,120 --> 00:16:54,960 Speaker 1: a zero coupon, think about it for its duration. Now, 293 00:16:54,960 --> 00:16:59,240 Speaker 1: instead of getting income, you go elsewhere the income and 294 00:16:59,040 --> 00:17:01,120 Speaker 1: you have to take rich but you but you do 295 00:17:01,160 --> 00:17:03,840 Speaker 1: it in a kind of bar better approach. Now. I 296 00:17:03,880 --> 00:17:06,800 Speaker 1: think some portfolio managers are now understanding this. But you 297 00:17:06,800 --> 00:17:10,920 Speaker 1: need to keep your duration intact. But you take risks aboard. 298 00:17:11,000 --> 00:17:15,200 Speaker 1: You go to the emerging market, local government bonds, maybe 299 00:17:15,280 --> 00:17:19,159 Speaker 1: you start looking at high yield heaven forbid cocoas. I 300 00:17:19,200 --> 00:17:22,560 Speaker 1: don't know, but you look at a range of instruments 301 00:17:22,560 --> 00:17:26,520 Speaker 1: that give you yield to complement the high quality products 302 00:17:26,840 --> 00:17:29,800 Speaker 1: that gives you duration, and that's still government bonds. Can 303 00:17:29,960 --> 00:17:33,480 Speaker 1: Can anybody make a plausible argument for government bond yields 304 00:17:33,560 --> 00:17:36,920 Speaker 1: to go up in the next few months. I mean, 305 00:17:37,119 --> 00:17:39,160 Speaker 1: they're probably a few out there, but are they plausible? 306 00:17:39,800 --> 00:17:43,080 Speaker 1: Stephen Major just says the first next thing about the 307 00:17:43,160 --> 00:17:46,440 Speaker 1: world has heard in a couple of weeks. I want 308 00:17:46,480 --> 00:17:49,520 Speaker 1: to ask you about Japan and whether or not you've 309 00:17:49,520 --> 00:17:51,520 Speaker 1: been talking about negative interest rates. There's been a lot 310 00:17:51,520 --> 00:17:53,320 Speaker 1: of talking about whether the Bank of Japan is going 311 00:17:53,400 --> 00:17:56,879 Speaker 1: to have to do something given the fact that the 312 00:17:57,080 --> 00:18:00,320 Speaker 1: end has not responded to negative interest rate through that 313 00:18:00,440 --> 00:18:03,920 Speaker 1: respondent in the way they would like it to. Yeah, 314 00:18:04,040 --> 00:18:07,679 Speaker 1: we were looked at this quite closely. Back in November. 315 00:18:08,080 --> 00:18:10,600 Speaker 1: I did a paper with Janet Henry Art economists here, 316 00:18:10,640 --> 00:18:13,719 Speaker 1: and we called it quantitative exhaustions, and we looked at 317 00:18:13,760 --> 00:18:16,960 Speaker 1: the various policy measures that could be taken next. So 318 00:18:17,160 --> 00:18:21,520 Speaker 1: that includes further negative rates, and in that case, um 319 00:18:22,280 --> 00:18:24,600 Speaker 1: Japan is probably one year ahead of where we thought 320 00:18:24,640 --> 00:18:27,120 Speaker 1: they'd be. So the I O E. R. Was plus ten. 321 00:18:27,200 --> 00:18:31,120 Speaker 1: It's now moving to negative territory for the margins. So 322 00:18:31,119 --> 00:18:34,400 Speaker 1: so the next step after going into deeper negative territory 323 00:18:35,320 --> 00:18:40,760 Speaker 1: might be helicopter money at some point, and if there's 324 00:18:40,760 --> 00:18:42,399 Speaker 1: scope in other parts of the world, there could be 325 00:18:42,480 --> 00:18:45,679 Speaker 1: luci fiscal policy um like in the Eurozone in some 326 00:18:45,760 --> 00:18:49,440 Speaker 1: parts for example. But the helicopter money is a weird one. 327 00:18:49,920 --> 00:18:53,000 Speaker 1: An economists would say that that means you have to 328 00:18:53,119 --> 00:18:57,440 Speaker 1: increase the based money without increasing the socol government debt. 329 00:18:58,119 --> 00:19:00,480 Speaker 1: But the thing is in Japan, you all you got 330 00:19:00,600 --> 00:19:03,800 Speaker 1: both government debt at high levels and based money up. 331 00:19:04,040 --> 00:19:06,400 Speaker 1: So if you start to cancel some of the government debt, 332 00:19:06,960 --> 00:19:09,399 Speaker 1: you leave the reserves and the money in the system. 333 00:19:09,440 --> 00:19:12,680 Speaker 1: So therefore you created helicopter back. Now, I don't know 334 00:19:12,680 --> 00:19:14,399 Speaker 1: whether that's going to happen. I'm not saying it is 335 00:19:14,400 --> 00:19:16,880 Speaker 1: going to happen. But if you look at the the 336 00:19:16,920 --> 00:19:20,960 Speaker 1: next stage of unconventional bodets, if you assume that we 337 00:19:21,080 --> 00:19:27,159 Speaker 1: just continue along this path absent mirac miraculous recovery, something 338 00:19:27,200 --> 00:19:29,879 Speaker 1: else will probably have to happen. So I wouldn't be 339 00:19:29,960 --> 00:19:33,680 Speaker 1: surprised if debt forgiveness or cancelation stop happening. Stephen Major, 340 00:19:33,760 --> 00:19:35,840 Speaker 1: Thank you so much for taking time out of holation 341 00:19:35,880 --> 00:19:40,120 Speaker 1: schedule for Steve Major in huge demand with hs BC 342 00:19:40,280 --> 00:19:43,560 Speaker 1: one point six eight percent in the yield Major's long 343 00:19:43,680 --> 00:19:47,200 Speaker 1: term Callsman one point five zero. Thanks to Bob Sinch 344 00:19:47,280 --> 00:19:51,080 Speaker 1: for pointing out a very important article. Andrew Wong writing 345 00:19:51,080 --> 00:19:53,600 Speaker 1: for Bloomberg News, I will put it out on all 346 00:19:53,680 --> 00:19:57,720 Speaker 1: social five decade market pro who called the Bond rally 347 00:19:58,119 --> 00:20:01,000 Speaker 1: that can only mean Gary Show a mus Street and 348 00:20:01,080 --> 00:20:04,160 Speaker 1: Gary Showing. I'll get that out. Stay with us. Bloomberg Surveillance. 349 00:20:07,760 --> 00:20:09,960 Speaker 1: Bloomberg Surveillance has brought you by flushing Bag. Open a 350 00:20:10,000 --> 00:20:12,479 Speaker 1: complete business checking account with fifteen thousand dollars or more 351 00:20:12,520 --> 00:20:15,480 Speaker 1: and get a free sixteen gig WiFi tablet. Visit flushing 352 00:20:15,480 --> 00:20:17,879 Speaker 1: Bag dot com for details. Member fd i C Equal 353 00:20:17,880 --> 00:20:28,160 Speaker 1: Housing Lender Broadcasting Live to New York, Bloomberg eleventh to Washington, 354 00:20:28,240 --> 00:20:33,280 Speaker 1: d C, Bloomberg to Boston, BLUEMBERG twelve Honors to San Francisco, 355 00:20:33,400 --> 00:20:37,840 Speaker 1: Bloomberg to the Country Series Exam Channel one ninety and 356 00:20:37,960 --> 00:20:42,000 Speaker 1: around the globe the Bloomberg Radio Plust Happen Bloomberg dot Com. 357 00:20:42,040 --> 00:20:45,600 Speaker 1: This is Bloomberg Surveillance. Good morning at seven thirty on 358 00:20:45,600 --> 00:20:48,320 Speaker 1: a Low Street and Michael McKee along with Tom Keene. 359 00:20:48,320 --> 00:20:51,400 Speaker 1: We're about two hours away from the start of trading. 360 00:20:51,440 --> 00:20:53,320 Speaker 1: Some corporate news you may want to pay attention to 361 00:20:53,440 --> 00:20:57,760 Speaker 1: this morning CBS first financial results after billionaire Sumnar red 362 00:20:57,840 --> 00:21:02,440 Speaker 1: Zone resigned as chairman. Higher fourth quarter income and better 363 00:21:02,760 --> 00:21:06,080 Speaker 1: UH that and profits that matchs to share. Revenue grew 364 00:21:06,520 --> 00:21:10,000 Speaker 1: h to three billion that surpassed analysts estimates of three 365 00:21:10,000 --> 00:21:13,720 Speaker 1: point eight billion. U Commerce Bank shares are up this 366 00:21:13,800 --> 00:21:18,119 Speaker 1: morning by sixtent fourth quarter profit, beating analysts estimates, Go 367 00:21:18,240 --> 00:21:22,440 Speaker 1: News from a European Bank for a Change, and Pandora 368 00:21:22,480 --> 00:21:26,760 Speaker 1: Media shares. They dropped more than five percent yesterday after 369 00:21:26,880 --> 00:21:31,159 Speaker 1: the Internet radio service reported fourth quarter revenue missing analysts estimates. However, 370 00:21:31,240 --> 00:21:34,000 Speaker 1: they are up by seven tenths of a percent in 371 00:21:34,040 --> 00:21:37,200 Speaker 1: early training today. Time now to check out with Michael 372 00:21:37,200 --> 00:21:40,320 Speaker 1: Barr and get the latest world and national headlines. Michael, 373 00:21:40,880 --> 00:21:43,320 Speaker 1: thank you very much. Mine killerby Clinton and Bernie Sanders 374 00:21:43,320 --> 00:21:46,840 Speaker 1: squared off in the last nine Democratic presidential debate. Clinton 375 00:21:46,840 --> 00:21:50,360 Speaker 1: took a swipe at Sanders for criticizing President Obama. Sanders 376 00:21:50,440 --> 00:21:52,879 Speaker 1: responded by saying he wasn't the one who ran against 377 00:21:52,960 --> 00:21:55,920 Speaker 1: him in two thousand and eight. Sanders on PBS also 378 00:21:56,000 --> 00:21:59,080 Speaker 1: pledged to take on the nation's biggest firms. I think 379 00:21:59,119 --> 00:22:02,399 Speaker 1: if y roself we're alive today, that great trust buster 380 00:22:02,440 --> 00:22:06,520 Speaker 1: would have said, break them up. Meanwhile, Clinton and Sanders 381 00:22:07,000 --> 00:22:10,520 Speaker 1: says that according to Clinton, that his Medicare plan for 382 00:22:10,680 --> 00:22:14,760 Speaker 1: all won't work. The numbers don't add up, and many 383 00:22:14,840 --> 00:22:18,600 Speaker 1: people will actually be worse off than they are right now. 384 00:22:18,880 --> 00:22:21,960 Speaker 1: The debate was held in Milwaukee. Defense Secretary Ash Carter 385 00:22:22,080 --> 00:22:24,959 Speaker 1: says the United Arab Emirates has agreed to send special 386 00:22:25,000 --> 00:22:29,680 Speaker 1: Forces soldiers to Syria to help local Sunni Arab fighters. Meanwhile, 387 00:22:29,760 --> 00:22:32,600 Speaker 1: diplomats from the US and Russia will lead a group 388 00:22:32,640 --> 00:22:35,360 Speaker 1: meeting today to work out the delivery of humanitarian aid 389 00:22:35,640 --> 00:22:39,800 Speaker 1: to sirious besieged areas. Diplomats also agreed to a temporary 390 00:22:39,840 --> 00:22:43,080 Speaker 1: hold of hostilities. A rookie New York City police officer 391 00:22:43,119 --> 00:22:45,800 Speaker 1: could face as much as fifteen years in prison following 392 00:22:45,880 --> 00:22:48,679 Speaker 1: yesterday's manslaughter conviction for the fatal shooting of an an 393 00:22:48,800 --> 00:22:52,320 Speaker 1: armed man in a dark stairwell. The court room audience gasped, 394 00:22:52,400 --> 00:22:56,440 Speaker 1: and officer Peter Leang broke into tears Global News twenty 395 00:22:56,440 --> 00:23:00,560 Speaker 1: four hours a day, powered by our journalists more than 396 00:23:00,600 --> 00:23:03,320 Speaker 1: a hundred fifty news bureaus from around the world. I'm 397 00:23:03,359 --> 00:23:07,320 Speaker 1: Michael Barr. Mike, Thank you, Michael. Now it's time for 398 00:23:07,320 --> 00:23:10,520 Speaker 1: the Bloomberg NBC Sports Update with John stash Our. John, 399 00:23:11,080 --> 00:23:12,920 Speaker 1: all right, my three local hockey teams all kind of 400 00:23:13,000 --> 00:23:15,520 Speaker 1: punch together, separated by just six points. They all hope 401 00:23:15,560 --> 00:23:17,840 Speaker 1: to make the postseason. The night after the Rangers won 402 00:23:17,880 --> 00:23:20,040 Speaker 1: their fourth in Rowe, the Islanders made it three straight 403 00:23:20,080 --> 00:23:23,760 Speaker 1: by a combined sixteen to five. Barkley Center three goals 404 00:23:23,800 --> 00:23:25,800 Speaker 1: in the fourteen minutes span of the first period. They 405 00:23:25,840 --> 00:23:28,720 Speaker 1: beat the l A Kings five to two. John tavares 406 00:23:28,920 --> 00:23:31,679 Speaker 1: Is twentieth goal. They're proved and standing up champion and 407 00:23:32,359 --> 00:23:34,399 Speaker 1: UM having a very good season this point. I think 408 00:23:34,440 --> 00:23:36,760 Speaker 1: we don't respect everyone that we play, but you know, 409 00:23:36,800 --> 00:23:39,119 Speaker 1: we're gonna have to be at our best. Um, you know, 410 00:23:39,119 --> 00:23:42,040 Speaker 1: obviously have success and be able to get the job done, 411 00:23:42,040 --> 00:23:43,480 Speaker 1: which I thought we did a good job from start. 412 00:23:43,880 --> 00:23:46,280 Speaker 1: Kings play the Rangers tonight at the Guard. NBA's hit 413 00:23:46,320 --> 00:23:48,280 Speaker 1: the All Star Break. Car Bello Anthony will be among 414 00:23:48,320 --> 00:23:51,520 Speaker 1: those playing. Sunday night in Toronto. Christaps Porzingis is in 415 00:23:51,560 --> 00:23:54,680 Speaker 1: the Rising Stars game tonight College whips. The nation's longest 416 00:23:54,680 --> 00:23:57,560 Speaker 1: wind streak belongs to the Sea Wolves A Stony Brooks 417 00:23:57,600 --> 00:24:00,920 Speaker 1: seventeen and A Rosan's mid December seven, five fifty two 418 00:24:00,920 --> 00:24:04,720 Speaker 1: at Maryland, Baltimore County, Manhattan be Quinnipiac eighty four seventy seven. 419 00:24:04,960 --> 00:24:07,720 Speaker 1: Syracuse made it four straight wins seven last eight eighty 420 00:24:07,800 --> 00:24:10,840 Speaker 1: five seventy two over Florida State, Yukon blew at twelve 421 00:24:10,920 --> 00:24:12,840 Speaker 1: point lee in the last six minutes and lost at 422 00:24:12,840 --> 00:24:16,920 Speaker 1: Temple sixty three eight. With Bloomberg NBC Sports Update, I'm 423 00:24:17,000 --> 00:24:20,840 Speaker 1: John Stamps Now, thank you John. Right now, we are 424 00:24:20,880 --> 00:24:23,840 Speaker 1: looking at gold prices that are dropping rapidly, off by 425 00:24:23,880 --> 00:24:27,160 Speaker 1: ten dollars eight tens of eight percent to twelve thirty eight. 426 00:24:27,160 --> 00:24:30,880 Speaker 1: Copper prices two to sixty five are up to dollars 427 00:24:31,480 --> 00:24:34,520 Speaker 1: one percent gain on the day. This is Bloomberg Surveillance 428 00:24:40,000 --> 00:24:43,560 Speaker 1: Welcome back to Surveillanceide. Michael McKee along with Tom Keene. 429 00:24:43,560 --> 00:24:46,360 Speaker 1: On a day when market sentiment has turned, at least 430 00:24:46,440 --> 00:24:49,760 Speaker 1: in the pre market hours here in New York, SMP 431 00:24:49,880 --> 00:24:52,399 Speaker 1: futures are up by twenty points one percent. It's one 432 00:24:52,440 --> 00:24:55,040 Speaker 1: percent gain for down futures they're up a hundred and 433 00:24:55,280 --> 00:24:58,680 Speaker 1: forty nine points right now, and Nazdak futures higher by 434 00:24:58,840 --> 00:25:02,960 Speaker 1: six that's a two point one percent gain on the day. 435 00:25:03,000 --> 00:25:05,080 Speaker 1: It's time now for the Boomberg n j I T 436 00:25:05,240 --> 00:25:08,159 Speaker 1: Stamp Report, brought to you by New Jersey Institute of Technology, 437 00:25:08,200 --> 00:25:10,960 Speaker 1: partnering with government and industry to apply the university's world 438 00:25:11,000 --> 00:25:14,640 Speaker 1: class research assets to innovate and spur economic growth. More 439 00:25:14,760 --> 00:25:18,040 Speaker 1: at n j I T dot E d U. Here's 440 00:25:18,080 --> 00:25:21,000 Speaker 1: John Tucker Well Michael A T and T is joining 441 00:25:21,000 --> 00:25:25,639 Speaker 1: the mobile speed race with Rizon Communications, outlining plans for 442 00:25:25,760 --> 00:25:30,320 Speaker 1: faster wireless technology to meet the increasing demand for sports, movies, 443 00:25:30,359 --> 00:25:34,080 Speaker 1: and even smartphone access to home appliances. A T and 444 00:25:34,119 --> 00:25:37,600 Speaker 1: T has picked Ericson and in Talent, says its first 445 00:25:37,600 --> 00:25:41,840 Speaker 1: two development partners for five G ultra fast wireless network 446 00:25:41,880 --> 00:25:45,159 Speaker 1: technology that will pick up where today's p G for 447 00:25:45,359 --> 00:25:49,520 Speaker 1: Generation left off. This, according to a statement today, Bill 448 00:25:49,600 --> 00:25:52,359 Speaker 1: Marra's founder of Google Ventures, has a purse full of 449 00:25:52,520 --> 00:25:55,919 Speaker 1: alphabets cash at a mandate to spend it on big ideas. 450 00:25:56,359 --> 00:25:58,800 Speaker 1: Having made a name in tech investments, he now wants 451 00:25:58,880 --> 00:26:00,919 Speaker 1: his firm, to be known is a big player in 452 00:26:01,280 --> 00:26:06,040 Speaker 1: healthcare and biotech, rebranded as GV in December. The adventure 453 00:26:06,119 --> 00:26:09,720 Speaker 1: capital fund has two point four billion dollars under management 454 00:26:10,080 --> 00:26:13,480 Speaker 1: last year, about a third of its investments. We're in healthcare. 455 00:26:14,040 --> 00:26:17,840 Speaker 1: That he is Today's Bloomberg n g I t STN report. Michael, 456 00:26:18,600 --> 00:26:20,960 Speaker 1: thank you. John. Well, we've been talking about negative interest 457 00:26:21,040 --> 00:26:24,720 Speaker 1: rates and how they are working and affecting markets around 458 00:26:24,760 --> 00:26:26,960 Speaker 1: the world. Somebody who's just put on a new research 459 00:26:27,000 --> 00:26:30,080 Speaker 1: paper on that very subject is Mickey Levy's chief us 460 00:26:30,200 --> 00:26:34,640 Speaker 1: kind of at Barenburg Bank and Mickey this morning. Um, 461 00:26:34,840 --> 00:26:39,120 Speaker 1: we're looking at the end stronger again one eight one. 462 00:26:39,720 --> 00:26:43,400 Speaker 1: You have to ask do negative interest rates really work 463 00:26:43,480 --> 00:26:49,639 Speaker 1: the way central bankers are hoping they will? Not? Necessarily, Mike. Um, 464 00:26:49,760 --> 00:26:53,119 Speaker 1: when we think about negative rates that central banks are imposing, 465 00:26:53,720 --> 00:26:59,360 Speaker 1: that is, charging banks for leaving deposits at the central bank, Um, 466 00:27:00,160 --> 00:27:04,840 Speaker 1: it conveys a negative perspective on where the economy might 467 00:27:04,920 --> 00:27:09,000 Speaker 1: keep be going. Also by suggesting that rates could go 468 00:27:09,400 --> 00:27:14,359 Speaker 1: more deeply negative, Uh, it deters households and businesses and 469 00:27:14,400 --> 00:27:17,480 Speaker 1: borrowing thinking they can borrow a cheaper rates going forward. 470 00:27:17,760 --> 00:27:22,800 Speaker 1: So here we're in this situation where for oh so long, uh, 471 00:27:22,920 --> 00:27:27,800 Speaker 1: central banks have been trying to stimulate their economies, like 472 00:27:27,800 --> 00:27:31,919 Speaker 1: like the US FED by keeping rates very very artificially 473 00:27:31,920 --> 00:27:35,160 Speaker 1: low and bond yields really low, and it just hasn't worked. 474 00:27:35,440 --> 00:27:37,520 Speaker 1: And I think one of the things that's adding to 475 00:27:37,960 --> 00:27:42,960 Speaker 1: the uncertainty in markets is are people finally coming to 476 00:27:43,000 --> 00:27:49,680 Speaker 1: the conclusion that g central banks cannot solve everybody's everybody's problems. Well, 477 00:27:50,119 --> 00:27:53,159 Speaker 1: why is Wall Street then so fixated on the idea 478 00:27:53,240 --> 00:27:57,840 Speaker 1: of whether the Fed will go to negative rates? Well, 479 00:27:57,880 --> 00:28:01,320 Speaker 1: once again, one has to think through whether it would 480 00:28:01,359 --> 00:28:06,720 Speaker 1: really help. We've had um quantitative easing and zero rates 481 00:28:06,760 --> 00:28:08,960 Speaker 1: up until recently on the on the federal funds rate 482 00:28:09,160 --> 00:28:15,000 Speaker 1: for five six years, and it hasn't stimulated the economy. Meanwhile, um, 483 00:28:15,080 --> 00:28:20,080 Speaker 1: you have a wide array of regulatory burdens that are 484 00:28:20,240 --> 00:28:25,600 Speaker 1: inhibiting banks from the credit process. So they've gummed up 485 00:28:25,640 --> 00:28:30,960 Speaker 1: the credit channels and the monetary channels. Um. And as 486 00:28:31,040 --> 00:28:35,440 Speaker 1: the market is is telling us the the negative rates 487 00:28:35,520 --> 00:28:40,840 Speaker 1: are just distinctly uh negative for the prospects for banks 488 00:28:41,080 --> 00:28:45,640 Speaker 1: and and so um you know the FEDS macro model 489 00:28:45,720 --> 00:28:47,520 Speaker 1: and the same for the e C b s. They 490 00:28:47,560 --> 00:28:51,360 Speaker 1: really don't capture some of the UH site not only 491 00:28:51,400 --> 00:28:56,640 Speaker 1: the psychological issues involved with negative rates, but but they 492 00:28:56,760 --> 00:29:03,120 Speaker 1: also do not capture the UH regulatory burdens that have 493 00:29:03,400 --> 00:29:07,680 Speaker 1: gummed up the not only the credit process, but inhibited 494 00:29:08,120 --> 00:29:12,080 Speaker 1: businesses from expanding for the future. And you see these 495 00:29:12,240 --> 00:29:16,239 Speaker 1: this web of regulations and tax policies that are just 496 00:29:16,560 --> 00:29:19,680 Speaker 1: bottling up the economy. And so you add this up 497 00:29:19,680 --> 00:29:25,200 Speaker 1: and say, gee, um, may maybe UH the central banks 498 00:29:25,200 --> 00:29:28,600 Speaker 1: are are pressing too hard and trying to extend their 499 00:29:28,600 --> 00:29:33,680 Speaker 1: policies way beyond their capabilities. Well, at this point, does 500 00:29:34,760 --> 00:29:39,160 Speaker 1: the FED have any other stimulated stimulative options should they 501 00:29:39,200 --> 00:29:44,479 Speaker 1: need them? Not that many because Mike, let me let 502 00:29:44,480 --> 00:29:48,880 Speaker 1: me just be very clear here, Um, the economy, for 503 00:29:48,960 --> 00:29:52,880 Speaker 1: the the US economy has been growing, you know, at 504 00:29:52,920 --> 00:29:56,760 Speaker 1: a disappointing but moderate rate for six years. Um. What 505 00:29:56,960 --> 00:30:01,000 Speaker 1: has inhibited from growing faster? It's certainly hasn't been FED 506 00:30:01,120 --> 00:30:05,400 Speaker 1: policy rates have been ridiculously low, and you have to 507 00:30:05,440 --> 00:30:10,360 Speaker 1: look elsewhere. And so I think people are over the 508 00:30:10,440 --> 00:30:15,240 Speaker 1: last handful of years, have put too much focus on 509 00:30:15,720 --> 00:30:20,760 Speaker 1: the FED being able to stimulate things. We know of 510 00:30:21,840 --> 00:30:25,600 Speaker 1: more queueie and low rates that doesn't generate permanent jobs 511 00:30:25,640 --> 00:30:29,120 Speaker 1: and doesn't know it just doesn't work, and I think 512 00:30:29,240 --> 00:30:33,200 Speaker 1: that the realization may finally be setting in. So rather 513 00:30:33,360 --> 00:30:39,800 Speaker 1: than thinking about what's in the FEDS toolbox, I would 514 00:30:39,880 --> 00:30:45,520 Speaker 1: much rather have UM global portfolio managers and global policy 515 00:30:45,560 --> 00:30:50,040 Speaker 1: makers say, gee, what are the real sources of the 516 00:30:50,280 --> 00:30:54,640 Speaker 1: disappointing economic performance? And then let's address those sources of 517 00:30:54,720 --> 00:31:00,000 Speaker 1: the problems with the appropriate tools, be they fiscal or regulatory. 518 00:31:00,440 --> 00:31:03,320 Speaker 1: We'll continue our conversation with Mickey Leaving and get at 519 00:31:03,320 --> 00:31:07,280 Speaker 1: the point of whether we need additional FED tools or 520 00:31:07,320 --> 00:31:10,920 Speaker 1: fiscal tools, or whether the economy is actually not doing 521 00:31:10,960 --> 00:31:13,520 Speaker 1: all that badly. We'll get some data at A thirty 522 00:31:13,520 --> 00:31:16,040 Speaker 1: this morning, including retail sales. Will have that for you 523 00:31:16,160 --> 00:31:22,040 Speaker 1: here as well on Bloomberg Surveillance. We're cutting you down 524 00:31:22,080 --> 00:31:24,160 Speaker 1: to the opening bell. Brought to you by the refined 525 00:31:24,200 --> 00:31:26,400 Speaker 1: Jeep Grand Cherokee Overland. It continues to raise the bar 526 00:31:26,480 --> 00:31:29,640 Speaker 1: with its luxurious interior and legendary four by four capability. 527 00:31:29,840 --> 00:31:31,920 Speaker 1: Drive on at your local Jeep dealer today. Jeep the 528 00:31:31,960 --> 00:31:39,120 Speaker 1: official vehicle of Killington Resort. Global Business news twenty four 529 00:31:39,120 --> 00:31:42,240 Speaker 1: hours a day. If Bloomberg dot Com the radio plus 530 00:31:42,280 --> 00:31:45,440 Speaker 1: mobile app and on your radio. This is a Bloomberg 531 00:31:45,480 --> 00:31:48,680 Speaker 1: Business flash and I'm Karin Moscow. This updates brought to 532 00:31:48,720 --> 00:31:50,680 Speaker 1: you by Sector Spider a t f so who I 533 00:31:50,720 --> 00:31:52,600 Speaker 1: buy a single stock when you can invest in the 534 00:31:52,760 --> 00:31:56,400 Speaker 1: entire sector. Visits Sector spdr s dot com are called 535 00:31:56,840 --> 00:31:59,880 Speaker 1: six six Sector e t f U S Stock index 536 00:32:00,080 --> 00:32:04,240 Speaker 1: futures are advancing in line with European equities and oil prices, 537 00:32:04,520 --> 00:32:07,560 Speaker 1: indicating the SNP five hundred well snap its longest losing 538 00:32:07,600 --> 00:32:10,560 Speaker 1: streaks in September. Who checked the markets every fifteen minutes 539 00:32:10,600 --> 00:32:13,640 Speaker 1: throughout the trading day On Bloomberg, SNP E mini futures 540 00:32:13,640 --> 00:32:15,840 Speaker 1: are up seventeen points down E mini futures up a 541 00:32:15,880 --> 00:32:19,080 Speaker 1: hundred twenty eight and Nastaciu many futures up thirty four. 542 00:32:19,160 --> 00:32:21,720 Speaker 1: The action Germany's have one and a half percent. Pen 543 00:32:21,800 --> 00:32:24,320 Speaker 1: Your treasury down nine thirty seconds, the yield one point 544 00:32:24,360 --> 00:32:27,320 Speaker 1: six eight percent. Nimax screwed oil is up four point 545 00:32:27,360 --> 00:32:29,600 Speaker 1: nine percent or a dollar twenty nine to twenty seven 546 00:32:29,600 --> 00:32:32,560 Speaker 1: dollars fifty cents of barrel Comacs gold is down eight 547 00:32:32,560 --> 00:32:35,160 Speaker 1: tenths percent or nine dollars eighty cents to twelve thirty 548 00:32:35,160 --> 00:32:38,000 Speaker 1: eight and ounce the euro and ALLAR twelve sixty six. 549 00:32:38,040 --> 00:32:41,280 Speaker 1: The N one twelve point seventy seven. Banks, which have 550 00:32:41,320 --> 00:32:43,440 Speaker 1: been the biggest source of pain for US stocks in 551 00:32:43,480 --> 00:32:46,640 Speaker 1: the market's latest route, are rebounding in early New York trading. 552 00:32:46,920 --> 00:32:48,920 Speaker 1: JP Morgan Chase is up more than three and a 553 00:32:48,960 --> 00:32:52,120 Speaker 1: half percent after chairman and chief executive Jamie Diamonds spent 554 00:32:52,160 --> 00:32:55,480 Speaker 1: twenty six point six million dollars on shares. Bank of 555 00:32:55,520 --> 00:32:58,080 Speaker 1: America is up more than two percent, and City Group 556 00:32:58,080 --> 00:33:00,520 Speaker 1: and Goldman Sachs are both up around two We're set. 557 00:33:00,720 --> 00:33:05,160 Speaker 1: That's a Bloomberg business flash. Tom and my Carameloska, thank 558 00:33:05,160 --> 00:33:09,400 Speaker 1: you very much. What is the outlook for the US economy? 559 00:33:09,440 --> 00:33:11,160 Speaker 1: We get some data at eight thirty that may give 560 00:33:11,240 --> 00:33:14,720 Speaker 1: us some clues. We'll get some inflation data with import prices, 561 00:33:14,760 --> 00:33:18,440 Speaker 1: and then we find out whether Americans spent money on stuff. 562 00:33:18,920 --> 00:33:22,280 Speaker 1: Retail sales come out at eight thirty as well Consumer 563 00:33:22,280 --> 00:33:25,280 Speaker 1: confidence ten o'clock this morning. People will be watching that 564 00:33:25,440 --> 00:33:29,600 Speaker 1: as well. Mickey Levy is chief economist at Barrenburg Capital Markets. 565 00:33:29,640 --> 00:33:32,840 Speaker 1: We were talking earlier about tools the FED may have 566 00:33:33,760 --> 00:33:38,320 Speaker 1: in case it needs to stimulate the economy. Your view 567 00:33:38,400 --> 00:33:42,520 Speaker 1: has been that that's not really what's necessary, at least 568 00:33:42,800 --> 00:33:46,320 Speaker 1: over the short medium term. It's not only my view today, 569 00:33:46,360 --> 00:33:49,280 Speaker 1: it's been my view for years. UM. Once again, the 570 00:33:49,320 --> 00:33:55,680 Speaker 1: fete ist UH implemented quantitative easing, zero interest rates for 571 00:33:55,720 --> 00:33:59,120 Speaker 1: five six years and nominal GDP that is current, all 572 00:33:59,120 --> 00:34:01,840 Speaker 1: of spending in ECON I mean hasn't accelerated above four. 573 00:34:02,640 --> 00:34:08,440 Speaker 1: There are other factors that are inhibiting economic growth UM, 574 00:34:08,640 --> 00:34:14,960 Speaker 1: fiscal policies, regulatory policies, not just in finance but in 575 00:34:15,040 --> 00:34:19,080 Speaker 1: non financial industries. So what we need to do is 576 00:34:19,480 --> 00:34:23,120 Speaker 1: we need to say, Okay, there are certain tools in 577 00:34:23,160 --> 00:34:28,040 Speaker 1: the FEDS toolbox that can stimulate aggregate demand, but there 578 00:34:28,080 --> 00:34:32,000 Speaker 1: are other UH economic policy tools that need to be 579 00:34:32,040 --> 00:34:36,000 Speaker 1: put to work here to lift the gray cloud hanging 580 00:34:36,040 --> 00:34:43,879 Speaker 1: over the economy. UM. Corporate texture form, changing some regulatory policies, 581 00:34:44,600 --> 00:34:50,759 Speaker 1: UM added UH mandatory cost of businesses of conducting business. 582 00:34:50,800 --> 00:34:54,720 Speaker 1: These types of things would go a long way. And 583 00:34:55,000 --> 00:34:59,279 Speaker 1: until they're adjusted, UM, all the monetary stimulus in the 584 00:34:59,360 --> 00:35:02,520 Speaker 1: world isn't going to stimulate Mickaelivia, you're the consul on 585 00:35:02,560 --> 00:35:06,880 Speaker 1: Foreign Relations confab with the vice chairman. Thank you for 586 00:35:06,920 --> 00:35:08,759 Speaker 1: being well man, and I'm not throwing them off into 587 00:35:08,840 --> 00:35:13,600 Speaker 1: a roll it Stanley Fisher, I've been rereading one of 588 00:35:13,640 --> 00:35:16,879 Speaker 1: the jewels of the financial crisis, which is Robert Skidelski 589 00:35:17,520 --> 00:35:21,439 Speaker 1: kines The Return of the Master and Permeating Lord. Skadelski's 590 00:35:21,480 --> 00:35:25,920 Speaker 1: work is a study of this single word uncertainty. Is 591 00:35:25,920 --> 00:35:31,000 Speaker 1: this a FED cognizant of the uncertainty that Vice Chairman 592 00:35:31,080 --> 00:35:34,719 Speaker 1: Fisher talked about, or are they so wedded to an 593 00:35:34,840 --> 00:35:39,200 Speaker 1: orthodox or heterodox theory that they can't even see or 594 00:35:39,280 --> 00:35:44,320 Speaker 1: gauge the level of uncertainties that are out there. Yes, Tom, 595 00:35:44,320 --> 00:35:47,120 Speaker 1: I think the FED is aware of a lot of 596 00:35:47,120 --> 00:35:52,640 Speaker 1: the uncertainties. But I think where the FED um um 597 00:35:52,880 --> 00:35:58,040 Speaker 1: is falling a little short here is it continues implicit 598 00:35:58,120 --> 00:36:01,319 Speaker 1: and it's macro models implicit. What it's saying is it's 599 00:36:01,480 --> 00:36:07,640 Speaker 1: using fairly standard uh economic orthodoxy that oh, just keep 600 00:36:08,080 --> 00:36:12,400 Speaker 1: rates low and bond yields artificially low and keep excess 601 00:36:12,440 --> 00:36:15,680 Speaker 1: liquidity in the system and the economy will turn around. 602 00:36:16,280 --> 00:36:20,480 Speaker 1: And I think what they need to do, even when 603 00:36:20,520 --> 00:36:24,560 Speaker 1: we look at the credit channels and banks is asked 604 00:36:24,560 --> 00:36:28,800 Speaker 1: serious questions, why why isn't the supply of credit and 605 00:36:29,000 --> 00:36:31,800 Speaker 1: more forthcoming? Even in the mortgage market, and this gets 606 00:36:31,800 --> 00:36:35,239 Speaker 1: to regulatory issues, not mine. I agree, And maybe this 607 00:36:35,320 --> 00:36:37,120 Speaker 1: is to your point in the school I thought your 608 00:36:37,360 --> 00:36:40,200 Speaker 1: gonna think of Marvin goodfriend, Cardia Milan and that and Mike, 609 00:36:40,960 --> 00:36:44,280 Speaker 1: excuse me, folks. It speaks to your decades of reporting 610 00:36:44,320 --> 00:36:47,879 Speaker 1: of the FED where Janet Yelling or whoever just says 611 00:36:48,040 --> 00:36:51,920 Speaker 1: we're done, we can't do it all. This is what 612 00:36:52,080 --> 00:36:56,279 Speaker 1: we're gonna do. Communicate the message and literally go to 613 00:36:56,360 --> 00:36:59,600 Speaker 1: the nations, through Congress, through the President and say you 614 00:37:00,040 --> 00:37:02,880 Speaker 1: I have to start participating. Mike, we haven't seen that. 615 00:37:03,040 --> 00:37:07,120 Speaker 1: You're getting to the heart of the argument that Muhammad 616 00:37:07,239 --> 00:37:09,719 Speaker 1: Arian is making in his new book, Now the only 617 00:37:09,800 --> 00:37:16,640 Speaker 1: game in town. That's myself. I'm giving you credit that 618 00:37:16,960 --> 00:37:19,799 Speaker 1: that was the way things worked, but it hasn't been. 619 00:37:19,880 --> 00:37:23,560 Speaker 1: Over the last uh six seven years, central banks have 620 00:37:23,840 --> 00:37:26,840 Speaker 1: not said we're done, that's all we can do because 621 00:37:26,880 --> 00:37:31,239 Speaker 1: the fiscal authorities have gone missing. They've basically said, well, 622 00:37:31,239 --> 00:37:33,040 Speaker 1: we got to figure out what we can do next. 623 00:37:34,120 --> 00:37:37,440 Speaker 1: So do you see any signs making that they will 624 00:37:37,480 --> 00:37:40,120 Speaker 1: get to that point the t junction that Mohammad is 625 00:37:40,200 --> 00:37:44,880 Speaker 1: talking about, that they will back off, that fiscal authorities 626 00:37:44,960 --> 00:37:48,000 Speaker 1: will step in or is this the world that we're 627 00:37:48,000 --> 00:37:51,360 Speaker 1: going to be living in? Okay, so we see Mario 628 00:37:51,520 --> 00:37:54,960 Speaker 1: dragging head of the European Central Bank be be much 629 00:37:55,040 --> 00:37:59,480 Speaker 1: more forthcoming than the FED and saying listen, monetary policies 630 00:37:59,520 --> 00:38:04,640 Speaker 1: only ding the the financial backstop, but it can't solve 631 00:38:04,680 --> 00:38:07,160 Speaker 1: all the problems. And our problems are home grown by 632 00:38:07,200 --> 00:38:11,000 Speaker 1: the different nations in Europe. There there their tax and 633 00:38:11,080 --> 00:38:16,640 Speaker 1: regulatory policies. The problem for the US is since the 634 00:38:17,360 --> 00:38:22,279 Speaker 1: FED is chartered by the Congress, and their Congress is 635 00:38:22,320 --> 00:38:26,759 Speaker 1: putting tremendous pressure on the FED from both the left 636 00:38:26,880 --> 00:38:30,640 Speaker 1: and the right for various reasons, the FED would be 637 00:38:30,840 --> 00:38:33,200 Speaker 1: very reticent to go up to Congress and say we 638 00:38:33,360 --> 00:38:38,320 Speaker 1: can't do anymore. Uh, you have to address fiscal policy, 639 00:38:38,520 --> 00:38:42,640 Speaker 1: You have to address how we allocate national resources in 640 00:38:42,680 --> 00:38:45,520 Speaker 1: the whole web of regular artist because the fear of 641 00:38:45,640 --> 00:38:47,759 Speaker 1: the FED is Congress may say, oh, if you can't 642 00:38:47,800 --> 00:38:51,880 Speaker 1: do anymore, we're gonna review your charter. So they don't 643 00:38:52,920 --> 00:38:55,840 Speaker 1: whatever anybody thinks and are what do we have forty 644 00:38:55,880 --> 00:38:59,960 Speaker 1: two listeners? Two or three? Well, that depends on whether 645 00:39:00,000 --> 00:39:03,400 Speaker 1: of the car started this morning and your uncle was 646 00:39:03,480 --> 00:39:05,600 Speaker 1: able to my uncle was able to get in. Okay, 647 00:39:05,680 --> 00:39:08,560 Speaker 1: so let's say there's fifty opinions listening to this show. 648 00:39:09,200 --> 00:39:13,000 Speaker 1: Whatever we think, We've had a set of crises this week. 649 00:39:13,120 --> 00:39:15,120 Speaker 1: We had a mini or a sort of or a 650 00:39:15,280 --> 00:39:17,440 Speaker 1: kind of like or a real crisis, however you want 651 00:39:17,440 --> 00:39:20,919 Speaker 1: to phrase it. My only rhetorical question, Mike, is when 652 00:39:21,239 --> 00:39:27,200 Speaker 1: do monetary authorities just simply say we can't do more? 653 00:39:27,760 --> 00:39:30,520 Speaker 1: And I didn't hear that from Cherry yelling well, and 654 00:39:30,719 --> 00:39:33,279 Speaker 1: you're not hearing it from Mr Levy either. I mean, 655 00:39:33,600 --> 00:39:37,239 Speaker 1: part of the problem is is they don't feel they 656 00:39:37,280 --> 00:39:39,920 Speaker 1: can do that. Well, I think part of the problem 657 00:39:40,520 --> 00:39:45,560 Speaker 1: or challenge is I think most FED members UM tend 658 00:39:45,640 --> 00:39:51,400 Speaker 1: towards UM activist monetary policy, and they actually think they 659 00:39:51,480 --> 00:39:54,000 Speaker 1: can do more. And once again, if you look at 660 00:39:54,040 --> 00:39:59,000 Speaker 1: the intricacies of the fed's own macro model, that is 661 00:39:59,040 --> 00:40:06,600 Speaker 1: a major drive forest implicit in that is UM equations 662 00:40:06,640 --> 00:40:09,080 Speaker 1: and the like that encourage them to do more. UM. 663 00:40:09,200 --> 00:40:16,240 Speaker 1: The model is inadequately captures the regulatory web that's tying 664 00:40:16,360 --> 00:40:20,840 Speaker 1: things and knots. And so then they turned and they 665 00:40:21,000 --> 00:40:24,640 Speaker 1: turned instead to Okay, so let's keep rates low. Maybe 666 00:40:24,719 --> 00:40:27,920 Speaker 1: we should even consider negative rates without thinking of the 667 00:40:28,000 --> 00:40:31,440 Speaker 1: negative psychological effects on that. This was actually a topic 668 00:40:32,640 --> 00:40:37,160 Speaker 1: how macro models adapt to financial developments. At Jackson Hole 669 00:40:37,440 --> 00:40:41,280 Speaker 1: last year. We a lot to cite boring macro papers 670 00:40:41,320 --> 00:40:45,520 Speaker 1: on Friday. Sure, we did that on Wednesday, Well, we 671 00:40:45,600 --> 00:40:48,879 Speaker 1: did well week. This is a special deal for Valentine's Day. Okay, 672 00:40:48,920 --> 00:40:51,600 Speaker 1: But but my point is if we take Marvin good 673 00:40:51,680 --> 00:40:56,400 Speaker 1: Friend out of Richmond Carnegie Mellon highly esteemed, and we 674 00:40:56,560 --> 00:41:02,040 Speaker 1: take Lord Skadelski out of Columbia highly esteem, Mickey leading 675 00:41:02,080 --> 00:41:05,359 Speaker 1: the ven diagram or the Valentine and looking at Valentine beer, 676 00:41:05,440 --> 00:41:08,680 Speaker 1: good morning everyone, Valentine ll they overlap. There's a lot 677 00:41:08,760 --> 00:41:12,239 Speaker 1: of agreement between schools of thought like Mickey lead and 678 00:41:12,600 --> 00:41:15,800 Speaker 1: name the leftist on the left. My point is the 679 00:41:16,000 --> 00:41:20,640 Speaker 1: common ground of monetary economics has done enough. And part 680 00:41:20,680 --> 00:41:24,320 Speaker 1: of what we've seen this week is the exhaustion of 681 00:41:24,440 --> 00:41:27,600 Speaker 1: good people doing good theory to try to do too much. 682 00:41:28,320 --> 00:41:31,399 Speaker 1: You know, what we've seen this week is not the exhaustion. 683 00:41:32,080 --> 00:41:36,680 Speaker 1: It's the markets perception that oh, maybe they can't do more. 684 00:41:36,840 --> 00:41:40,440 Speaker 1: Fair But but think about the following. The FED always 685 00:41:40,640 --> 00:41:46,800 Speaker 1: talks about its toolbox, and the FED through its forward 686 00:41:46,920 --> 00:41:49,040 Speaker 1: guidance and look at what the b o J did. 687 00:41:49,080 --> 00:41:51,960 Speaker 1: They lowered rates did minus ten basis points. But but 688 00:41:52,360 --> 00:41:55,200 Speaker 1: b o J Governor Corota says, oh, and there's no 689 00:41:55,480 --> 00:42:01,600 Speaker 1: limit to how negative we can make rates go um um. 690 00:42:01,840 --> 00:42:07,400 Speaker 1: The central banks around the world are leading the markets 691 00:42:07,560 --> 00:42:11,960 Speaker 1: to believe that they're capable of stimula. Okay, we have 692 00:42:12,040 --> 00:42:16,560 Speaker 1: twenty seconds and markets by that are they did the 693 00:42:16,600 --> 00:42:22,479 Speaker 1: banks capable? No? And I think I think enough enough 694 00:42:22,840 --> 00:42:26,920 Speaker 1: and the the economy could really get jump started if 695 00:42:26,960 --> 00:42:30,399 Speaker 1: we had a few shifts in fiscal and regular Dr Leavy, 696 00:42:30,440 --> 00:42:32,600 Speaker 1: thank you so much with Barrenberg Capital Markets. This has 697 00:42:32,640 --> 00:42:35,359 Speaker 1: been a fabulous conversation. Thank you for the many notes 698 00:42:35,440 --> 00:42:37,440 Speaker 1: of tweets that have we've gotten out in this. I mean, 699 00:42:37,600 --> 00:42:39,319 Speaker 1: just you know, it's sort of been a Friday after 700 00:42:39,360 --> 00:42:42,000 Speaker 1: a while. We granted green on the screen, a little 701 00:42:42,080 --> 00:42:44,080 Speaker 1: fragile now, but nevertheless a better tape