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

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Speaker 1: Bloomberg one to Boston, Bloomberg twelve hundreds to San Francisco,

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Speaker 1: Bloomberg nine six to the country Serious Exam Channel one

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Speaker 1: nineteen and around the globe the Bloomberg Radio Plus Appen

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Speaker 1: Bloomberg dot Com. This is Bloomberk Surveillance and good Birday.

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Speaker 1: I'm Terry in Moscow, along with Tom Keene and Michael

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Speaker 1: McKee and the opening dal brought to you by Sector

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Speaker 1: Spider e t F spin by a single stockman. You

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Speaker 1: can invest in the entire sector. Visits sector spdr s

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Speaker 1: dot com are called one six six Sector et F

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Speaker 1: stocks lower at the open, the sn P five hundred

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Speaker 1: down to tenths per cent or four points to twenty

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Speaker 1: seventy six, down, Jones Industrial average down a tenth of

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Speaker 1: upper cent or twenty one points to seventeen thousand, eight

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Speaker 1: hundred seventy six, and the nastacts down four tenths per

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Speaker 1: cent or nineteen points to eighteen ten. Your treasury down

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Speaker 1: four thirty seconds. See yeld one point seven six percent

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

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Speaker 1: I'm execrut oil down four point four percent or a

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Speaker 1: dollar seventy eight to thirty eight fifty eight of barrel comics.

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Speaker 1: Gold is up six tens percent or seven dollars ten

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Speaker 1: cents to twelve forty one eight n ounce. The euro

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Speaker 1: at other thirteen o one the yen one oh eight

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Speaker 1: point five nine. Tom and Mike Karen, thank you so much,

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Speaker 1: so much. It is a west east east west travel.

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Speaker 1: Very often we don't think north south from America down

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Speaker 1: to Brazil, or for that matter, from Europe to Africa.

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Speaker 1: North south is a different thing. Shannon O'Neill is Rockefeller

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Speaker 1: Senior Fellow for Latin America at the Consul on Foreign Relations,

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Speaker 1: and she's had the courage over her career to always

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Speaker 1: be looking uh north to south out of Yale and

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Speaker 1: Harvard University. Dr Nil, good morning. Your your book is

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Speaker 1: Two Nations Indivisible, which is about Mexico. Let's talk about

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Speaker 1: Brazil as a nation. Is it two nations this morning?

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Speaker 1: With all this talk of impeachment? It is two nations

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Speaker 1: this morning. And we saw yesterday long and somewhat tortuous process.

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Speaker 1: But the Lower House of Representatives vote for impeachment about

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Speaker 1: seventy of them decided that this current president, Delma Reception,

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Speaker 1: should be impeached. But we do need to remember there

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Speaker 1: are hundred and thirty seven votes to support her to

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Speaker 1: keep her in power. And we look back Brazil how

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Speaker 1: to impeach on proceeding against the president ben and when

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Speaker 1: he went up for this boat, there were only a

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Speaker 1: handful of people that support him. Here Dolma has a

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Speaker 1: real support and so that shows that there's huge divides

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Speaker 1: within brazil society about what should be done, what should

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Speaker 1: be done the I mean, an easy answer is to

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Speaker 1: say they need to fix the economy or get some

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Speaker 1: of the graft out of the government. But how easy

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Speaker 1: is it going to be to carry that out? I mean,

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Speaker 1: this is the challenge the new government will have. There's

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Speaker 1: a couple more procedures that need to go forward, but

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Speaker 1: it looks like by beginning to mid May, the vice

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Speaker 1: president will step in and become the president at least

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Speaker 1: while then the Senate goes forward with the actual impeachment proceedings.

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Speaker 1: So the Vice President Tamara will need to pull together

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Speaker 1: a coalition. He'll put new ministers in all of the

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Speaker 1: different ministries and try to begin this reform process. But

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Speaker 1: he will come in with a bit of a question

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Speaker 1: of legitimacy. This isn't an election, it's an impeachment proceeding.

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Speaker 1: And there's also a real challenge. How do you pull

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Speaker 1: Brazil have a recession that's now near you know, down

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Speaker 1: four percent so far this year, if surveillance jets down

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Speaker 1: eight thousand one dollars rounded up eight thousand, two hundred dollars,

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Speaker 1: business class around trip American Airlines, Tarrio, what do we find?

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Speaker 1: I can't figure out, Shannon, the protests in the street,

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Speaker 1: the linkage to Mr Lula russaf all the corruption. Where

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Speaker 1: is the public? So the public here is somewhat divided.

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Speaker 1: There are many people they're tired of the recession, They're

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Speaker 1: tired of hearing about the corruption scandals, much of which

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Speaker 1: are being uncovered by an independent judiciary. But they're seeing

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Speaker 1: the whole political class, much of the elite business class,

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Speaker 1: implicated a new scandal. So there's a real frustration and

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Speaker 1: you see that in opinion polls. Delmo recess public opinion

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Speaker 1: support has been near ten percent for last several months here,

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Speaker 1: so she has very little support the frustration of the

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Speaker 1: general public, but there are supporters from her party. The

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Speaker 1: Workers party that's been in power for twelve thirteen years.

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Speaker 1: Many of them have come out of poverty under Lula

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Speaker 1: and then her presidency. Many are worried about falling back,

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Speaker 1: that a new government might not keep the social support

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Speaker 1: of the other things that helped them move up the

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Speaker 1: economic scale. So there's a real uncertainty here, particularly within

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Speaker 1: the base that has traditionally supported her and her party. Well,

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Speaker 1: Vice President Turner doesn't have great public opinion numbers either.

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Speaker 1: What do we know about him exactly? So there's a

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Speaker 1: poll that said want Lula, excuse me, Dilma and teach,

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Speaker 1: and then fifty eight percent wanted to Mary and Teach.

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Speaker 1: So it's not as if he comes in with a

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Speaker 1: huge goodwill or backing of of the general population there.

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Speaker 1: He is a longstanding, very traditional politician within brazil system.

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Speaker 1: He's been around for a long time. He comes from

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Speaker 1: a party that is a very centrist party. It's the

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Speaker 1: biggest party in Brazil in terms of local offices and

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Speaker 1: the like that they hold, but they really have no ideology.

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Speaker 1: They've been many would say, a party for hire over

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Speaker 1: the last couple of decades as Brazil's democracy has grown,

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Speaker 1: and so they'll go with either a more conservative coalition

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Speaker 1: and more more progressive coalition m but what they want

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Speaker 1: our posts and what they want our financial resources. So

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Speaker 1: he also has the challenge within his own party one

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Speaker 1: of pushing forward to perform agenda, which he said he

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Speaker 1: will do, and he put forth a paper last at

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Speaker 1: the end of last year saying that this is what

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Speaker 1: he would do if he came into power. But he's

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Speaker 1: going to be a bit at his own party, of

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Speaker 1: which there's many mayors, there's many local representatives who are

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Speaker 1: going to be searching for state resources, particularly as Brazil

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Speaker 1: heads to its own midterm elections in mayoral elections which

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Speaker 1: come up next October. I looked and as you know

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Speaker 1: in the blocks that we have with you today this

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Speaker 1: half hour, tell me about the adjacent effects that we see,

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Speaker 1: the adjacent effects that we see on South America. Does

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Speaker 1: it have a knock on effect or is Brazil a

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Speaker 1: discreet moment? Just for Brazil, it has knock on effect.

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Speaker 1: And probably the biggest knock on effect we will see

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Speaker 1: is in Argentina, and that is right now a much

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Speaker 1: better story. Right we had twelve years under the kation

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Speaker 1: of government, also a very populoist government and that has

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Speaker 1: come to an end. Madicio Macary now is a their

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Speaker 1: center or center right, very market friendly government is trying

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Speaker 1: to turn around Argentina. In his first hundred plus days,

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Speaker 1: he's unified the exchange rate, he's reduced subsidies, he's resolved

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Speaker 1: the problems with the debt holdout. He's really bringing Argentina

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Speaker 1: back to him, to the markets, the global capital markets.

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Speaker 1: But Brazil is Argentina's largest trading partner, and so what's

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Speaker 1: happening in Brazil is hitting the Argentine economy and particularly

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Speaker 1: it's manufacturing sectors as automotive and other manufacturing sectors because

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Speaker 1: they're so linked. So Argentina tries to climb out of

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Speaker 1: its own economic problems and is making the right steps

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Speaker 1: reform wive policy wife to do so, they're getting hit

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Speaker 1: by what's happening in Brazil. The question then becomes how

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Speaker 1: quickly does Brazil get over this um or are we

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Speaker 1: going from the frying pan to the fire. You know,

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Speaker 1: I don't see a quick turnaround in Brazil. We saw

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Speaker 1: the markets are happy about this, the realit has been

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Speaker 1: strengthening over the last week or so. Because of this.

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Speaker 1: The other markets are are jumping up but I think

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Speaker 1: this is a longer term prospect. And Brazil it may

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Speaker 1: be an interim government that can make a few reform

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Speaker 1: that are necessary, but they're really going to have to

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Speaker 1: wait till you get democratic legitimacy back, and that might

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Speaker 1: be when we see another presidential election coming up. Will

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Speaker 1: continue with Shannon on Neil. Dr O'Neil. She's the only

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Speaker 1: one in the nation, Mike who has priced out the

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Speaker 1: wall between the US and Mexico to the square foot.

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Speaker 1: She waited across the Rio Grant to figure out the

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Speaker 1: price of the wall. Uh. We'll talk to Shannon neal

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Speaker 1: about Mexico. This is a with great respect, particularly for

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Speaker 1: all of our listeners on serious next m across the

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Speaker 1: Great Southwest and into Texas. This is uh a huge

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Speaker 1: topic and we'll talk to Shannon O'Neil about it. Mike,

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Speaker 1: what do you have over there? What do you see? Well,

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Speaker 1: just seeing no real reaction to the home builders numbers

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Speaker 1: this morning, and a lot of reaction continues at least

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Speaker 1: an equity markets to oil prices. Uh, you know they're

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Speaker 1: they're dragging down equities again today. But on a four eighteen,

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Speaker 1: you wonder how the economy gets into April. We'll be

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Speaker 1: didn't get some glimmers of that. We'll do that for

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Speaker 1: you much of the week. The down negative sixty two

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Speaker 1: the first print on the vix al point seven seven

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Speaker 1: point move fourteen thirty nine. Our surveillance has brought to

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Speaker 1: you by moncusc. Valvo. Visit mantus volvo dot com. Here's

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Speaker 1: Michael Barr with lose headlines My time. The death toll

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Speaker 1: from this weekend's earthquake and Ecuador is at two hundred

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Speaker 1: seventy two. Buildings were flattened by the devastating seven point

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Speaker 1: eight earthquake along the Pacific Ocean coast. World leaders from

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Speaker 1: Washington to the Vatican are offering their support to Ecuador.

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Speaker 1: It was on this day in nineteen o six the

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Speaker 1: devastating San Francisco earthquake took place. This is the first

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Speaker 1: year where all of the survivors of the quake are gone.

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Speaker 1: Texas Senator Ted Cruizes, responding delegations from Republican arrival Donald

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Speaker 1: Trump that Cruiz is trying to steal the presidential nomination

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Speaker 1: by rallying delegates in smaller states. Cruise, during a town

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Speaker 1: hall on ABC IS Good Morning America Today, called Trump

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Speaker 1: a sore loser in those five states starting from Utah,

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Speaker 1: North Dakota, Wisconsin, Colorado, and Wyoming. One point three million

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Speaker 1: people voted in those five states and he lost all five.

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Speaker 1: We have won five in a row, and Donald's upset,

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Speaker 1: so he's throwing a fit. The elite women have started

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Speaker 1: running just a few moments ago in the hundred twentieth

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Speaker 1: running of the Boston Marathon. The elite men will begin

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Speaker 1: in less than a half hour. About thirty thousand runners

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Speaker 1: from almost one hundred countries will take part in the race.

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Speaker 1: Security is tied along the twenties six point two mile course.

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Speaker 1: Global News twenty four hours a day. Michael Barr nighttime

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Speaker 1: and Michael, I'm not running this year. Oh shoot, and

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Speaker 1: you could win it. I once thought about it long ago,

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Speaker 1: long ago, long ago, and far away. It is immagical.

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Speaker 1: The buston marathis good morning, Bloomberg. Bloomberg Surveillance is brought

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Speaker 1: to you by Bank of American Mery Lynch. To them,

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Speaker 1: every day is Earth Day. They are committed to bringing

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Speaker 1: higher finance to lower carbon Marylynch, Pierce Center and Smith

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Speaker 1: Member f SI. Global Business News twenty four hours a

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Speaker 1: day at Bloomberg dot com, the Radio plus mobile app

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Speaker 1: and on your radio. This is a Bloomberg business flash

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Speaker 1: and I'm care at Moscow. There's updates brought to you

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Speaker 1: by National Realty Returns on cash and rented real estate.

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Speaker 1: Find them at n r I a dot net. U

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Speaker 1: s stocks are joining a decline in global equities, and

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Speaker 1: currencies of commodity exporting nations are slumping as scrude oil

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Speaker 1: tumbles after talks between major producers ended in Doha without

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Speaker 1: any agreement on limiting output. We checked the markets every

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Speaker 1: fifteen minutes throughout the trading day on Bloomberg, and the

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Speaker 1: S and P five hundred is down to tenths per

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Speaker 1: cent or three points to seventies seven. Now Jones industrial

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Speaker 1: average down less than a tenth of upper center twelve

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Speaker 1: point us to seventeen thousand, eight hundred eighty five. Then

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Speaker 1: as dacts down four tenths per cent or seventeen points

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Speaker 1: to forty nine twenty ten. Your treasury down seven thirty seconds.

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Speaker 1: The yield one point seven seven percent yield on the

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Speaker 1: two year point seven four percent NIMEX. Screude oil down

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Speaker 1: three and a half percent or a dollar forty to

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Speaker 1: thirty eight nineties six of barrel comes gold up three

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Speaker 1: tenths per cent, or four dollars twenty cents at twelve

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Speaker 1: thirty nine an ounce, the euro a dollar thirteen o two,

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Speaker 1: and the yen is at one oh eight point eight zero.

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Speaker 1: Morgan Stanley joining the parade of Wall Street banks that

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Speaker 1: beat profit estimates by cutting costs to counter a drop

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Speaker 1: in revenue from fixed income and equities trading. It shares

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Speaker 1: now down about three tenths percent at twenty five dollars

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Speaker 1: seventy cents. Confidence among US home builders was little change

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Speaker 1: in April, indicating the housing market lack momentum as the

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Speaker 1: spring selly selling season got under way. And that's a

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Speaker 1: bloom bird business flash. Tom and Mike Karen, thank you

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Speaker 1: so much. This is something I've really looked forward to.

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Speaker 1: Shannon O'Neill, he was provided, say, anthing on international relations,

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Speaker 1: migrating celts from the United States, on Cuba, on Brazil,

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Speaker 1: as we've been talking on our main focus, which is Mexico.

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Speaker 1: Shannon and I say this with great respect for both

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Speaker 1: sides of the debate. Is the discussion about a quote

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Speaker 1: unquote wall on the border that much different now than

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Speaker 1: in two thousand six ten years ago. You know, some

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Speaker 1: of the rhetoric is a bit different, and some of

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Speaker 1: the descriptions of Mexicans and why we need a roll

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Speaker 1: is a bit different. But we did see from two

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Speaker 1: thousand and six on, after the elections and and after

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Speaker 1: some of the discussions, we saw a big build up

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Speaker 1: in spending on the US Mexico border. We saw a

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Speaker 1: huge increase in the number of people of patrols, of

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Speaker 1: customs and border officials there. So we have been as

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Speaker 1: a country, United States, with bipartisan support investing in security

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Speaker 1: allowing along that border. And we do have a wall,

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Speaker 1: some seven hundred miles worth of wall in areas that

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Speaker 1: makes sense to actually have a wall. And I think

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Speaker 1: there's a lot of discussions and papers written about whether

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Speaker 1: a wall along the whole two thousand mile border makes

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Speaker 1: any sense in terms of economics and in terms of

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Speaker 1: what we actually want to do. But this is an

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Speaker 1: area actually the United has invested pretty significantly over the

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Speaker 1: last ten years to increase security there. And Mike, this

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Speaker 1: comes out of HR. Four four three seven, the Border Protection,

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Speaker 1: Anti Terrorism and Illegal Immigration Control Act, which I believe

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Speaker 1: was two thousand five, which I'm afraid to ask Dr

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Speaker 1: on you know how many thousands of pages? Was that

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Speaker 1: way too many? I want to go back even farther.

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Speaker 1: We had an amnesty program largely built around agricultural workers.

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Speaker 1: But what impact did that have? Is there any learning

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Speaker 1: experience there? There is? So under President Reagan, we had

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Speaker 1: a bill, or we had a law that granted a

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Speaker 1: paptist citizenship for many many undocumented immigrants in the United States,

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Speaker 1: and there were just over two million that were Mexicans um.

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Speaker 1: And what's quite interesting about that is many did uh

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Speaker 1: get a green card, did become part of our process,

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Speaker 1: but actually many fewer became U. S. Citizens. And I

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Speaker 1: think either side of the aisle would have fought, and

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Speaker 1: so we only had about a third of those people.

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Speaker 1: So now right, that's almost thirty years ago, only about

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Speaker 1: a third of those actually became U. S. Citizens. And

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Speaker 1: that does give some evidence for this idea that's out

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Speaker 1: there that Mexicans come here, they want to work, they

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Speaker 1: want to provide security for their family, and then they

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Speaker 1: want to go home when they've finished that part of

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Speaker 1: their career, and they provided some money back home. And

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Speaker 1: that was what played out back in six and in

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Speaker 1: the preceding years, and could again if we had another

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Speaker 1: comprehensive immigration reform that would give a pactic citizenship in

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Speaker 1: sixty six mile fence along the California coast from San

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Speaker 1: Diego to the Pacific Ocean. Well, we've had a series

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Speaker 1: of fences and another one in the last couple of years, Um, Shannon,

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Speaker 1: they don't seem to make much of a difference. This

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Speaker 1: isn't really the way to patrol the border. And as

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Speaker 1: Janet Napolitana when she was governor down there and then

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Speaker 1: she went on to be a head of Homeland Security,

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Speaker 1: she had a quipped that said, you know, show me

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Speaker 1: a fifty football and I'll show you a fifty one

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Speaker 1: f ladder. And so this isn't necessarily the way to

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Speaker 1: get the security that we want. Um, But we have

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Speaker 1: I said, we've invested a lot. We've invested in people,

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Speaker 1: we've invested in technology, and we have seen a decline

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Speaker 1: in the people coming over the border. Part of that economics,

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Speaker 1: but part of it is the security that's put put

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Speaker 1: in place over this last decade. Well, obviously this is

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Speaker 1: all in the fertile mind of one Republican candidate who

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Speaker 1: doesn't seem to understand how any of this works. But uh,

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Speaker 1: if if if he were elected and seems to be

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Speaker 1: a small chance of that UH and wanted to stop remittances,

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Speaker 1: would that be possible. It would be very difficult. Um.

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Speaker 1: These are individual transactions from private individuals to private individuals

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Speaker 1: in the other countries, so they don't really flow through

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Speaker 1: governments as such. Um it would be a huge hit

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Speaker 1: for companies like Western Union and others, but perhaps also

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Speaker 1: for banks because there'd be more regulation and trying to

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Speaker 1: decipher what is remittance versus what is a general transaction

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Speaker 1: that's going between these two countries. And we also have

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Speaker 1: to remember, over the last twenty plus years, the amount

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Speaker 1: of trade, the commerce the companies that work on both

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Speaker 1: sides of the border has exploded. There's over half a

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Speaker 1: trillion dollars worth of goods that moves back and forth

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Speaker 1: every year, and so there's a lot of money moving

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Speaker 1: back and forth to keep factories open on both sides

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Speaker 1: of the border. Social there's a lot of flows, and

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Speaker 1: you're trying to pull out a very few and see

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Speaker 1: which ones are happening between people who are undocument in

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Speaker 1: the United States, and and it's a very complicated process.

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Speaker 1: They have a sane discussion on this hugely emotional issue

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Speaker 1: with your expertise and deserve it a claim. If Shannon

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Speaker 1: O'Neill of that incredibly leftist New York City group CFR

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Speaker 1: parachuted into the Latin American Studies program of the University

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Speaker 1: of Arizona, Tucson, Arizona, what's the debate you perceive among

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Speaker 1: the Americans most invested in this border debate? What would

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Speaker 1: you what would we see or you see among the

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Speaker 1: people of Arizona. You know, I was down there speaking

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Speaker 1: just a couple of months ago, and what's really fascinating

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Speaker 1: to me is the debating Arizona seems to be moving

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Speaker 1: away from where it was a few years ago when

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Speaker 1: they passed a law to to go after anybody who

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Speaker 1: might possibly be undocumented, and really cracking down on that part.

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Speaker 1: And what you see the businesses, they're big ones, but

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Speaker 1: also a medium and small sized ones. They see their

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Speaker 1: future link to Mexico. Now when they look for consumers,

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Speaker 1: it's a small state, not a big population. When they

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Speaker 1: looked at who they could sell to, Mexico is at

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Speaker 1: the top of their list, right, There's lots of consumers

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Speaker 1: on the other side of that border. So I do

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Speaker 1: think even in states like Arizona, which became the poster

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Speaker 1: child for an anti American point of view. You're seeing

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Speaker 1: a huge shift there. They see the benefits of trade

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Speaker 1: with Mexico and the benefits of the back and forth growing.

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Speaker 1: Let's be realistic here and talk about what's likely to happen. Uh,

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Speaker 1: it is likely that Hillary Clinton will be elected president UM.

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Speaker 1: Where then does the US Mexico relationship go? Where are

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Speaker 1: we now and where does it go? Well? Ley Clinton

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Speaker 1: has spent a lot of time when she was Secretary

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Speaker 1: of State working with Mexico. Under her tenure, there was

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Speaker 1: an expansion and revamping of the Meriden Initiative, which is

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Speaker 1: the security cooperation that between the two countries begun under

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Speaker 1: President Bush. Um. She's spent a lot of time on

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Speaker 1: immigration issues. We've heard that a lot on her campaign

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Speaker 1: in the past, and obviously Mexicans and Mexican Americans are

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Speaker 1: a big part of that. So I think those two

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Speaker 1: things push forward. I mean, one of the big questions

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Speaker 1: is what happens on trade. This is obviously quite important

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Speaker 1: between our two nations. We see not just a lot

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Speaker 1: of back and forth, which I mentioned, but also really

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Speaker 1: the integration of companies where something is made in Mexico

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Speaker 1: something in the United States and has put together on

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Speaker 1: one side of the border or the other. So I

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Speaker 1: think there's a real question under a quipent administration what

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Speaker 1: happens to TPP, of which Mexico and many other countries

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Speaker 1: are apart um. But I do think we see a

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Speaker 1: pretty positive relationship. We see the continuation of Obama's deepening

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Speaker 1: of the relationship between the two countries and moving forward

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Speaker 1: on on many sides. One final question quickly, if we

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Speaker 1: could have mentioned Corl Scodiers the other day, is someone

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Speaker 1: maybe with a different view, former Secretary of Commerce within

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Speaker 1: the Republican Party. Where do these people go in the

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Speaker 1: debate after November? Where does the establishment Republican Latin American debate?

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Speaker 1: Where do they head after what we've observed and after

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Speaker 1: what we do to get to election? And I think

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Speaker 1: that's the big question for Republicans in general, where do

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Speaker 1: you head after election night depending on who becomes their

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Speaker 1: candidates the two leading ones today um and whether one

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Speaker 1: of those could possibly win. But there is my impression,

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Speaker 1: is a feeling that there will have to be a

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Speaker 1: bigger national conversation here about what the two parties want

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Speaker 1: to represent because overall, in in my take, three of

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Speaker 1: the five leading candidates are anti establishments figures. So obviously

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Speaker 1: I'm both side of the aisle. There are people who

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Speaker 1: feel are not being represented by the traditional party, Doctor Ornill,

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Speaker 1: thank you so much. Shannon O'Neill, and folks can't say

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Speaker 1: enough about her book on UH Mexico, Two Nations, UH

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Speaker 1: Indivisible Mexico and the United States. Just a superb one

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Speaker 1: volume read on all of Mexico. Michael, what a great

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Speaker 1: way to start the week, Daniel Jurgen, Shannon O'Neill, Phil Ler, Yeah,

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Speaker 1: I mean it's just been and Richard huss we don't

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Speaker 1: leave him aside. And it is the week of the

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Speaker 1: Queen's birthday. We will celebrate here. We'll talk a little

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Speaker 1: bit about it. We've got, of course economics this week.

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Speaker 1: I will go beneath the headline data on the housing economy.

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Speaker 1: We are produced by Kieren Juchanon ken Felly, our global

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Speaker 1: technical director. It's Bloomberg Surveillance