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Speaker 1: Broadcasting live to New York, Bloomberg eleventh to Washington, d C.

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Speaker 1: Bloomber to Boston, Bloomberg twelve units to San Francisco, Bloomberg

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Speaker 1: to the Country series at Channel one nine and around

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Speaker 1: the globe the Bloomberg Radio plus Bloomberg dot Com. This

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Speaker 1: is Bloomberg surveillance warning at seven thirty on All straight,

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Speaker 1: I might com a key. Along with Tom Keane, We're

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Speaker 1: keeping an eye on Morgan Stanley shares. Net income fell

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Speaker 1: fifty three percent to one point one three billion. That

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Speaker 1: works out to fifty five cents a share. It was

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Speaker 1: a dollar eighteen a year earlier. Profit this quarter was

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Speaker 1: higher than the forty seven cent average estimate of analysts

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Speaker 1: surveyed by Bloomberger. That has shares in Morgan Stanley up

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Speaker 1: two PepsiCo posting its first quarter profit, beating analyst estimates.

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Speaker 1: North American snack sales rose, we ate more junk food

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Speaker 1: earnings eighty nine cents to share, excluding some items analysts

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Speaker 1: had forecast eighty one. Since shares of PepsiCo up three

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Speaker 1: tenths of a percent, varies in the leading suitor for Yahoo,

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Speaker 1: they say after a number of bidders decided not to

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Speaker 1: make an offer for the struggling web company. This According

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Speaker 1: to the Wall Street Journal, Time alphabet I A C

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Speaker 1: Interactive have dropped out, and there's some fallout from the

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Speaker 1: Japanese earthquakes this week, uh Sony falling the most in

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Speaker 1: more than two months. On news, It's camera chip factory

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Speaker 1: on the southern island of Kyushu is offline, and Mitsubishi

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Speaker 1: you f j Morgan Stanley Analyst's say Toyota macy It's

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Speaker 1: operating profit fall this quarter after the earthquakes disrupted parts supplies.

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Speaker 1: Now let's check in with Michael Barr and get the

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Speaker 1: latest world in National Headlights one. Mike, thank you very much.

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Speaker 1: Ecuador continues to try and to dig out from a

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Speaker 1: devastating seven point eight earthquake that killed at least two

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Speaker 1: hundred seventy two people along the Pacific Ocean coast in

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Speaker 1: southwestern Japan. Us IS eight is being flown in by

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Speaker 1: the military for earthquake relief effort. At least forty two

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Speaker 1: people died and ten people are still missing. After Thursday

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Speaker 1: and early Sunday quakes, About five thousand police officers will

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Speaker 1: be in place today for the running of the one

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Speaker 1: D twenty of the Boston Marathon. Security will be tight

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Speaker 1: along the twenty six point two mile course. Boston Police

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Speaker 1: Commissioner William Evans to real crazy world out there, and

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Speaker 1: you know, you can never be too safe, but you know,

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Speaker 1: in the near future, hopefully we can slowly but surely

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Speaker 1: get it back to the way it was. The Obama

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Speaker 1: administration will ask the Supreme Court today to put in

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Speaker 1: place two programs that could shield roughly four million people

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Speaker 1: from deportation and make them eligible to work in the US.

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Speaker 1: Texas is leading twenty six states challenging the programs. President

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Speaker 1: Obama announced in Britain's Queen Elizabeth will mark her ninety

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Speaker 1: of the birthday this week. Nothing fancy plan. Global News

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Speaker 1: twenty four hours a day, powered by our journalists michael'bara Minke.

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Speaker 1: Thank you, Michael. I think we'll throw all parties for now.

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Speaker 1: Let's check in. NBC Sports Update Rob Aga Morning Mica.

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Speaker 1: Day after the Rangers not at things up with Pittsburgh,

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Speaker 1: the Islanders followed suit at Barkley Center. That's your first

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Speaker 1: overtime game ever at Barkley Center in the playoffs anyway,

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Speaker 1: and it goes to New York, of course, who snuck

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Speaker 1: one by Roberto Lawango. They beat the Panthers four to

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Speaker 1: three and it gives the Islanders a two one series lead.

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Speaker 1: Game three will be Wednesday in Brooklyn. Rangers they host

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Speaker 1: Pittsburgh on Tuesday. Baseball Yankees avoided a sweep at the

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Speaker 1: hands of the Mariners at the Stadium Massa. Harrolds Naka

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Speaker 1: earned his first win of the year. They beat Seattle

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Speaker 1: four to three. They'll enjoy the ops day to day.

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Speaker 1: The Mets, they rely on Harvey and de Graham and

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Speaker 1: sinderguard for solid out as it was. Stephen Matts, though

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Speaker 1: he came up big, earned his first win of the

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Speaker 1: year in a six nothing shutout. Mets are in Philly

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Speaker 1: tonight and NBA playoffs Cleveland, Miami, San Anzonio and the Clippers.

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Speaker 1: They all won their series. That's your nbc burg sports update, Mike,

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Speaker 1: Thank you very much, rob Well. The Queen of England's

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Speaker 1: birthday is the twenty one. She'll be nineties. She was

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Speaker 1: born Princess Elizabeth Alexandra Berry in nineteen twenty six. Party

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Speaker 1: here on Bloomberg. Definitely on Bloomberg surveillance. We will celebrate

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Speaker 1: the Queen's birthday right now. Uh, They're not celebrating in London,

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Speaker 1: whether it's the price of oil or the battle over Brexit,

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Speaker 1: which has officially launched. Now the Footsie is down by

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Speaker 1: eleven points to tenths of a percent on a percentage basis,

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Speaker 1: one of your worst performers right now, although the United

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Speaker 1: States along the same lines, S and P futures are

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Speaker 1: off by three tenths down futures two tenths lower. Right now.

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Speaker 1: Time for the Bloomberg n j I T STEM Report,

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Speaker 1: brought to you by New Jersey Institute of Technology, investing

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Speaker 1: more than a hundred and ten million dollars a year

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Speaker 1: in applied research to solve problems and improve life. Learn

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Speaker 1: more at Stories of Innovation dot m j I T

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Speaker 1: dot DUN and some of the stories making news in science,

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Speaker 1: technology engineering at MATH. This morning, privately owned startup one

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Speaker 1: web wheel build a factory to mass produce small satellites

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Speaker 1: near NASA's Kennedy Space Center in Florida. People familiar with

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Speaker 1: the matter of told routers the company plans and initial

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Speaker 1: production run of nine hundred satellites to provide high speed

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Speaker 1: Internet access. One web has raised about five million dollars

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Speaker 1: some several backers, including Virgin group Airbus, Qualcom and Coca

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Speaker 1: Cola for its partner in China, has completed a twelve

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Speaker 1: hundred mile road test of a self driving car seaun

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Speaker 1: Qing chang Ang Automobile says the vehicle used cameras and

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Speaker 1: radar on the trip to test lane changing, cruise control

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Speaker 1: and to negotiate traffic congestion. The push for self driving

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Speaker 1: vehicles part of a broader state initiative in China urging

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Speaker 1: manufacturer to upgrade their technology. The World Health Organization and

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Speaker 1: the Pan American Health Organization have launched a new Zekeo

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Speaker 1: Research Projects List. This a database that lists and categorizes

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Speaker 1: all studies on the virus. Among other things, experts have

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Speaker 1: analyzed to map the gaps in scientific knowledge about the

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Speaker 1: virus and its implications for public health. That he is

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Speaker 1: this morning was Bloomberg and j I t Standard Report. Michael,

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Speaker 1: Thank you John Tucker, who is with Bloomberg News. Elizabeth

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Speaker 1: Queen Elizabeth, her title is a little bit longer Queen

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Speaker 1: of the United Kingdom, Canada, Australia and New Zealand and

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Speaker 1: Head of the Commonwealth. She needs a bigger business card.

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Speaker 1: Some tells me she doesn't need a business card. Phil

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Speaker 1: Verlager is president of p K Verliger. He doesn't need

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Speaker 1: as big a business card as the queen either, but

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Speaker 1: probably knows more about the oil markets. And the oil

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Speaker 1: markets are kind of what's driving asset classes today. With

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Speaker 1: West Texas at thirty ninety one down three point six percent,

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Speaker 1: Brent crude is at forty one seventy six, that's a

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Speaker 1: three point one percent decline on the day. All this

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Speaker 1: after oil minister from about sixteen countries, including most members

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Speaker 1: of OPEC, met and cutter and failed to agree on

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Speaker 1: any kind of production limits film. Nobody in the oil

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Speaker 1: markets took that seriously. Uh. They never felt there was

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Speaker 1: gonna be any kind of meaningful reduction in the amount

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Speaker 1: of oil that was out there, just basically just a

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Speaker 1: fig leaf. And yet we see this kind of reaction.

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Speaker 1: Why the psycholo psychological reaction to something that everybody would

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Speaker 1: have told you last week wasn't going to mean anything anyway, Michael.

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Speaker 1: The word that I keep using irrational exuberants or my

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Speaker 1: my phrase, irrational petro exuperants. There are the the oil

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Speaker 1: market benefits from thousands, maybe not a million, people investing

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Speaker 1: in oil who are not involved in the industry open

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Speaker 1: interest in the futures markets well over five billion barrels

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Speaker 1: now and that grown. And what happened is that a

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Speaker 1: lot of people believe the hype and they thought something

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Speaker 1: was going to happen, and so they started to sell

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Speaker 1: and that is sent down the forward price. We'll know better,

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Speaker 1: Uh what's going on in about two two or three

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Speaker 1: o'clock when the cash price from Brent comes in, which

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Speaker 1: is what the price that people pay for a cargo

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Speaker 1: of oil. That has been tightening in the physical market.

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Speaker 1: It's been tightening, and it's been tightening for a number

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Speaker 1: of reasons. Venezuela. Every time I talk on this show,

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Speaker 1: we talked about Venezuela. Well, now the power is about

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Speaker 1: to go out, and the presidents asked women not to

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Speaker 1: use hair uh hair dryers to blow their hair. Uh,

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Speaker 1: it's the elmno is killing the water behind the big damn.

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Speaker 1: He's got a good story on it in the Bloomberg line.

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Speaker 1: It's Uh, we see problems in Nigeria now. Kuwait today

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Speaker 1: is got a strike which probably will last a little while.

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Speaker 1: You go back and you Richard Hoss was talking about

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Speaker 1: Saudi Arabia there at the end of his interview on

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Speaker 1: the show, A very good comment. But what we have

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Speaker 1: also is uh uh the the problems in Kuwait, we

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Speaker 1: have the problems across the Gulf, and it's we're gonna

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Speaker 1: be nickeled and dived in terms of losing supply. So

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Speaker 1: you know, the situation is reversed for a while. Well,

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Speaker 1: the question then becomes how far would oil prices fall?

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Speaker 1: I don't think oil prices are going to fall very

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Speaker 1: much because Venezuela is tipping. Uh it may uh production

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Speaker 1: may drop dramatically. Uh And the next month or two

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Speaker 1: last week, uh Slumberje announced it was leaving and really

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Speaker 1: upset pdvs A because the national oil company there because

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Speaker 1: they the Venezuelans can't pay them. There the OPD slumberge

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Speaker 1: a couple of billion dollars and they and then is

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Speaker 1: Winna needs uh slamberge to make its oil fields work.

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Speaker 1: They also need electricity they don't have it. So I

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Speaker 1: had oil dips and then oil goes back up a

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Speaker 1: little bit. Uh, I don't think it goes up a

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Speaker 1: lot because what's going to happen is as these investors

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Speaker 1: step out, the economics of storing oil become problematic, and

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Speaker 1: we have stored over a billion barrels of oil over

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Speaker 1: the last year, and that some of that oil is

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Speaker 1: going to start start coming out of storage, so that

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Speaker 1: you know, we move up to say, into fifty dollar range,

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Speaker 1: and then that re restarts a good deal of uh

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Speaker 1: production in the United States and that will come back

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Speaker 1: pretty quickly. And uh, you know, so we go back down.

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Speaker 1: But it's you know, this is this was you know,

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Speaker 1: this is a selling by the rumors, sell the news.

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Speaker 1: Let's come back with still Lark Bliger to talk more

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Speaker 1: about what happens in the petroleum space, not just in

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Speaker 1: the asset, but also in the countries that produce it.

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Speaker 1: Bloomberg Surveillance is brought to you by Mount Kisco Volvo

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Speaker 1: is it Mount Kisco Vovo dot Com? Gloombo Business News

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Speaker 1: twenty four hours a day, if Bloomberg dot Com, the

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Speaker 1: radio plus mobile app and on your radio. This is

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Speaker 1: a Bloomberg Business Flash And I'm Karen Moscow and this

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Speaker 1: updates brought to you by the Professional NBA at Bentley University,

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Speaker 1: offering streamline admissions to working professionals like you and the

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Speaker 1: Learn more at Bentley dot E, d U, slash p

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Speaker 1: m b A Morgan's down. They are reporting first quarter

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Speaker 1: profit that beat analysts estimates, as revenue from trading stocks

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Speaker 1: and bonds declined less than some analysts predicted. Shares are

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Speaker 1: up more than three percent this morning. PepsiCo up about

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Speaker 1: one percent. It posted first quarter profit that also beat

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Speaker 1: analysts estimates. US dock indise futures are lower, fall having

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Speaker 1: a weekly advance, and equities after talks between the world's

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Speaker 1: largest oil producers ended without a deal on freezing output,

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Speaker 1: but checked the markets every fifteen minutes throughout the trading day.

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Speaker 1: On Bloomberg SNP EVENY futures down seven points, Dow E

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Speaker 1: Many futures down forty nine, NASA doc emuny futures down

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Speaker 1: fourteen the decks, and Germany's down a tenth of upper

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Speaker 1: set CAC in Paris and f T one hundred both

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Speaker 1: down about two tenths per set ten year treasury up

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Speaker 1: one thirty second, the yield one point seven four percent,

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Speaker 1: yield on the two year point seven two percent. Non

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Speaker 1: max screwed oil down at three point nine percent, down

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Speaker 1: a dollar fifty five to thirty eighty one a barrel

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Speaker 1: COMEX gold is up four ten percent or four dollars

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Speaker 1: ninety cents to twelve thirty nine fifty an ounce. The

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Speaker 1: euro An dollar thirteen o two the end one oh

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Speaker 1: eight point to five. And that's a bloomberg business flash.

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Speaker 1: Tom and Mike Carasco, thank you very much. We're talking

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Speaker 1: with Phil Verliger of PK Erligerum about the oil situation

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Speaker 1: now with the failure of the Doha talks and oil

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Speaker 1: prices falling, and you mentioned you didn't think they would

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Speaker 1: go down that far, that they would then start to

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Speaker 1: rise again into the range. Does that then bring the

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Speaker 1: frackers back in? And if that's the case, then you

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Speaker 1: know where do prices go from there? This this gets

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Speaker 1: very hard to game out. I would imagine, Uh, it

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Speaker 1: is impossible the game out, you know. Mr hass said

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Speaker 1: the said that prices are essentially unfoecastable, and he's right.

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Speaker 1: You know, there's a range. It's clear the facilities want

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Speaker 1: to increase their production because they understand some of the

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Speaker 1: oil they have in the ground will never be produced, uh,

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Speaker 1: due to global warming considerations will be we won't be

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Speaker 1: using oil probably much, but they how much we produce

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Speaker 1: it's hard to say. I think that probably sixty is

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Speaker 1: as a cap of the Wall Street Journal had a

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Speaker 1: really good optic uh still there on the web. The

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Speaker 1: shows the cost of producing in various countries, and it's

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Speaker 1: well below sixty in the United States. So supply will

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Speaker 1: increase here, uh, supply will increase in Canada, Supply will

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Speaker 1: increase in Russia. Russia is a rich area for fracking.

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Speaker 1: It's could take some time, but there will be fracking.

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Speaker 1: And so the I think oil stays someplace. You know,

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Speaker 1: it'll go above sixty occasionally, it'll be in the thirty forties,

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Speaker 1: down to the thirties. I mean, they're the New York

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Speaker 1: The really interesting thing that nobody's talking about today, as

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Speaker 1: an article on the Saturday New York Times about Saudi

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Speaker 1: Arabia possibly pulling seven hundred billion dollars in assets in

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Speaker 1: the United States is a piece of well, discuss this

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Speaker 1: is where you're in terms of crossing over politics. I

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Speaker 1: saw that article. What's it mean, Well, it's I'm scared

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Speaker 1: because I think the Saudis are really would be really

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Speaker 1: worried if that legislation passed. The legislation would allow the

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Speaker 1: Saudia government to be sued. It would lift sovereign immunity

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Speaker 1: for the nine eleven attacks, and I understand why those

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Speaker 1: who were affected are worried. But if the Saudis, if

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Speaker 1: a law passes and the Saudis decide they want to

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Speaker 1: pull all that money, uh, it could have It could

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Speaker 1: really push the economy down, and that would take oil

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Speaker 1: prices down. Uh. Now you know, I was at the

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Speaker 1: Peterson Institute for International Economics for years, So I talked

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Speaker 1: to Ted Truman, who was quoted in the article. And

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Speaker 1: the conventional view is the Saudis wouldn't do that. The

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Speaker 1: conventional view is it would just disrupt financial markets too much.

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Speaker 1: But the conventional view is that the Saudi Arabia was

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Speaker 1: going to do something in November two thousand fourteen. This

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Speaker 1: comes back to what Richard hass was saying about the

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Speaker 1: stability of the Saudi government. This is a new bunch

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Speaker 1: of people. And if I were a Saudi, I would

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Speaker 1: look at this and say, Gee, the Iranian assets were

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Speaker 1: frozen from nineteen seventy nine until fifteen in the United States.

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Speaker 1: I don't dare risk leading seven hundred billion dollars in

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Speaker 1: the United States. You pull that, you really disrupt the

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Speaker 1: world economy and gosh knows whereverything. Phil, thank you so

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Speaker 1: much for bringing this article. Michael McKee very quickly. Mr Truman,

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Speaker 1: who folks to put it in perspective, it's not outrageous

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Speaker 1: to say he invented the G twenty concept. Ted Truman quote,

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Speaker 1: the only way Saudi Arabia could punish us is by

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Speaker 1: punishing themselves, which is sort of the gameplay there. Michael, Yeah,

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Speaker 1: I known Ted for for years. Very smart man. Uh.

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Speaker 1: I'm wondering, if Phil about Iran in this situation as well.

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Speaker 1: They're not necessarily tied up in the nine eleven bill,

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Speaker 1: but how much more oil can they produce? And what

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Speaker 1: kind of effect is the face off with the Saudi

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Speaker 1: Is going to have on their oil production? I one,

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Speaker 1: I'm not sure about Iran. Uh, It's it's an enigma

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Speaker 1: to me. I think they can probably produce three or

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Speaker 1: four hundred thousand barrels of any more this year, uh,

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Speaker 1: and that will supplement the loss in production from some

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Speaker 1: other countries like Nigeria and as well, so so that

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Speaker 1: I don't think the Saudis are as worried about as

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Speaker 1: Iran as they are about UH. Some of the particular

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Speaker 1: Venezuela in these other countries. You know, the Saudis in

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Speaker 1: the Vealezuela has had a fight many years ago over

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Speaker 1: market ship events. We're gonna put push the United Saudis

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Speaker 1: out of the United States. So yeah, I think I

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Speaker 1: think Iran is a sideshow. I guess is the word

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Speaker 1: all used right now? It's it's not the real show.

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Speaker 1: That the real show is that the Saudis want to

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Speaker 1: keep the price at forty or fifty dollars a barrel

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Speaker 1: to build their market share. Maybe they'll let it go

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Speaker 1: to thirty or twenty five. They want to build their

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Speaker 1: market share. They want to produce their oil first. The

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Speaker 1: Coites want to produce their oil first. The UAE wants

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Speaker 1: to produce their oil first. And they want to let

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Speaker 1: the high cost producers shut down. Now that's the bottom line.

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Speaker 1: Who's the highest cost producers? I think right now, Venezuela's

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Speaker 1: probably the highest cost producer. Canada's number two, and uh

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Speaker 1: and those are you know, the two producers that are

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Speaker 1: will probably be uh see the quickest drop in output.

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Speaker 1: And I'm sure the thought he's understand that the fracking

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Speaker 1: in the United States is going to continue, and they

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Speaker 1: also understand fracking will continue in Russia, so that essentially

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Speaker 1: they want to keep the price to a level where

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Speaker 1: both of fracking isn't so great that it squeezes Middle

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Speaker 1: Eastern productor out. If you were the Philip cave Berliger

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Speaker 1: with us on oil, one of his August resume builders

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Speaker 1: was to be a professor and my right phil at

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Speaker 1: the University of Calgary. Yeah. I was a David Mitchell

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Speaker 1: and Canna professor there for several years. So it's not

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Speaker 1: your fault. The Canadians aren't in the Stanley Cup, right know,

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Speaker 1: that not my responsibility. And Dryden with a classmated Cornell

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Speaker 1: and and that's good. Sorry, sorry, you know, And I'm

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Speaker 1: sorry over one doesn't have a hockey team. Well I

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Speaker 1: am too. But but it's very historic that you were

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Speaker 1: with Mr Dryden during the magic of the Cornell years.

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Speaker 1: Lucawa writing for Bloomberg. Should Canadians be rooting for a

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Speaker 1: lower oil price? This is Benny Charles wonderful work up

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Speaker 1: at c IBC. I mean, it's it's very counterintuitive. Is

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Speaker 1: does Canada benefit with lower oil prices? Canada really wants

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Speaker 1: lower oil prices. One the Canadians, like the United States,

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Speaker 1: can bring their costs down and so they can be competitive.

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Speaker 1: I mean, the great thing about the Canadian economy the

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Speaker 1: US economy is where market oriented. Again Mr Hass was

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Speaker 1: talking about this. It's uh, you know, the Venezuelans suffered

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Speaker 1: dramatically because of what's happened since nine uh to shoves.

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Speaker 1: But Canada can be very competitive with lower oil prices.

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Speaker 1: And the thing is the Canadian economy. The population of

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Speaker 1: Canada is in Ontario and Quebec in British Columbia, and

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Speaker 1: they need the lower oil prices for their economy to

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Speaker 1: be competitive, and they need to readjust they can do

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Speaker 1: it and they will do it. And the Canadians are

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Speaker 1: very resourceful. But if they're among the highest cost producers,

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Speaker 1: what level of oil prices can they get down to?

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Speaker 1: I think probably they can get down to sixty or

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Speaker 1: fifty five. They just again this comes back to irrational exuberance.

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Speaker 1: You look at all the money that was poured into

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Speaker 1: the oil exploration. The Canadians were, uh, we're building taj

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Speaker 1: Mahals in Calgary is a huge building that in Canna

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Speaker 1: built while I was teaching up there. Uh, it was

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Speaker 1: you know, they they thought prices had no place to

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Speaker 1: go but up. And this is the classic example. And

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Speaker 1: and oil, I mean, and if you go back, this

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Speaker 1: is the third example of this. I mean, it was

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Speaker 1: fiber optics in around two thousand, it was housing in

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Speaker 1: two thousand five to two thousand nine, it was oil

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Speaker 1: from two thousand nine, uh to today. It's you have

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Speaker 1: to think about doing things at reasonable costs and get

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Speaker 1: your costs down. And the US is doing a pretty

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Speaker 1: good job. The Saudis are doing a pretty good job

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Speaker 1: of that. Still, thank you so much, silverly your peak

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Speaker 1: on a wide set of topics, Mike, what really is

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Speaker 1: important is Luke how on his great article I just

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Speaker 1: put it on Twitter. Folks on Canada and lower oil

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Speaker 1: prices has a photograph of one Sea Crawford of the

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Speaker 1: Chicago Blackhawks, who was lights out phenomenally yesterday. They were

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Speaker 1: both great that it was wild. Did you happen to

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Speaker 1: watch the Capitals Philadelphia a little bit? I watched a

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Speaker 1: little bit of mc mr Mason's major, major Major. I

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Speaker 1: saw that it looked like Tom Kim was so painful.

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Speaker 1: The puck, folks was at the red line, the center

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Speaker 1: ice line, and it was sort of tossed. It wasn't shot.

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Speaker 1: Do you agree it wasn't shot and it it went

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Speaker 1: between his legs into the goal. As somebody said that

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Speaker 1: that video clip will live on for decades. It will,

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Speaker 1: which you know, never say never when you anyways, it's

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Speaker 1: it's a hockey moment, folks, and we're we're loving it

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Speaker 1: on a Monday morning. But Benny Tall of C I

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Speaker 1: b C, Benny Tall, Mike is the best economists I've

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Speaker 1: ever seen on studying who is small business in America

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Speaker 1: the best? It's just a great at thinking about what

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Speaker 1: small business Americas. That was brilliant with Phil everlier. What

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Speaker 1: a great way to start the week as we do economics, finance, investment,

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Speaker 1: another hour of Bloomberg Savannah's