Speaker 1: Broadcasting live to New York, Cloomberg eleventh to Washington, d C,
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Speaker 1: I'm Terry in Moscow, along with Tom Keene and Michael
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Speaker 1: stocks lower at the open, the sn P five hundred
Speaker 1: down to tenths per cent or four points to twenty
Speaker 1: seventy six, down, Jones Industrial average down a tenth of
Speaker 1: upper cent or twenty one points to seventeen thousand, eight
Speaker 1: hundred seventy six, and the nastacts down four tenths per
Speaker 1: cent or nineteen points to eighteen ten. Your treasury down
Speaker 1: four thirty seconds. See yeld one point seven six percent
Speaker 1: yield on the two year point seven four percent. Now
Speaker 1: I'm execrut oil down four point four percent or a
Speaker 1: dollar seventy eight to thirty eight fifty eight of barrel comics.
Speaker 1: Gold is up six tens percent or seven dollars ten
Speaker 1: cents to twelve forty one eight n ounce. The euro
Speaker 1: at other thirteen o one the yen one oh eight
Speaker 1: point five nine. Tom and Mike Karen, thank you so much,
Speaker 1: so much. It is a west east east west travel.
Speaker 1: Very often we don't think north south from America down
Speaker 1: to Brazil, or for that matter, from Europe to Africa.
Speaker 1: North south is a different thing. Shannon O'Neill is Rockefeller
Speaker 1: Senior Fellow for Latin America at the Consul on Foreign Relations,
Speaker 1: and she's had the courage over her career to always
Speaker 1: be looking uh north to south out of Yale and
Speaker 1: Harvard University. Dr Nil, good morning. Your your book is
Speaker 1: Two Nations Indivisible, which is about Mexico. Let's talk about
Speaker 1: Brazil as a nation. Is it two nations this morning?
Speaker 1: With all this talk of impeachment? It is two nations
Speaker 1: this morning. And we saw yesterday long and somewhat tortuous process.
Speaker 1: But the Lower House of Representatives vote for impeachment about
Speaker 1: seventy of them decided that this current president, Delma Reception,
Speaker 1: should be impeached. But we do need to remember there
Speaker 1: are hundred and thirty seven votes to support her to
Speaker 1: keep her in power. And we look back Brazil how
Speaker 1: to impeach on proceeding against the president ben and when
Speaker 1: he went up for this boat, there were only a
Speaker 1: handful of people that support him. Here Dolma has a
Speaker 1: real support and so that shows that there's huge divides
Speaker 1: within brazil society about what should be done, what should
Speaker 1: be done the I mean, an easy answer is to
Speaker 1: say they need to fix the economy or get some
Speaker 1: of the graft out of the government. But how easy
Speaker 1: is it going to be to carry that out? I mean,
Speaker 1: this is the challenge the new government will have. There's
Speaker 1: a couple more procedures that need to go forward, but
Speaker 1: it looks like by beginning to mid May, the vice
Speaker 1: president will step in and become the president at least
Speaker 1: while then the Senate goes forward with the actual impeachment proceedings.
Speaker 1: So the Vice President Tamara will need to pull together
Speaker 1: a coalition. He'll put new ministers in all of the
Speaker 1: different ministries and try to begin this reform process. But
Speaker 1: he will come in with a bit of a question
Speaker 1: of legitimacy. This isn't an election, it's an impeachment proceeding.
Speaker 1: And there's also a real challenge. How do you pull
Speaker 1: Brazil have a recession that's now near you know, down
Speaker 1: four percent so far this year, if surveillance jets down
Speaker 1: eight thousand one dollars rounded up eight thousand, two hundred dollars,
Speaker 1: business class around trip American Airlines, Tarrio, what do we find?
Speaker 1: I can't figure out, Shannon, the protests in the street,
Speaker 1: the linkage to Mr Lula russaf all the corruption. Where
Speaker 1: is the public? So the public here is somewhat divided.
Speaker 1: There are many people they're tired of the recession, They're
Speaker 1: tired of hearing about the corruption scandals, much of which
Speaker 1: are being uncovered by an independent judiciary. But they're seeing
Speaker 1: the whole political class, much of the elite business class,
Speaker 1: implicated a new scandal. So there's a real frustration and
Speaker 1: you see that in opinion polls. Delmo recess public opinion
Speaker 1: support has been near ten percent for last several months here,
Speaker 1: so she has very little support the frustration of the
Speaker 1: general public, but there are supporters from her party. The
Speaker 1: Workers party that's been in power for twelve thirteen years.
Speaker 1: Many of them have come out of poverty under Lula
Speaker 1: and then her presidency. Many are worried about falling back,
Speaker 1: that a new government might not keep the social support
Speaker 1: of the other things that helped them move up the
Speaker 1: economic scale. So there's a real uncertainty here, particularly within
Speaker 1: the base that has traditionally supported her and her party. Well,
Speaker 1: Vice President Turner doesn't have great public opinion numbers either.
Speaker 1: What do we know about him exactly? So there's a
Speaker 1: poll that said want Lula, excuse me, Dilma and teach,
Speaker 1: and then fifty eight percent wanted to Mary and Teach.
Speaker 1: So it's not as if he comes in with a
Speaker 1: huge goodwill or backing of of the general population there.
Speaker 1: He is a longstanding, very traditional politician within brazil system.
Speaker 1: He's been around for a long time. He comes from
Speaker 1: a party that is a very centrist party. It's the
Speaker 1: biggest party in Brazil in terms of local offices and
Speaker 1: the like that they hold, but they really have no ideology.
Speaker 1: They've been many would say, a party for hire over
Speaker 1: the last couple of decades as Brazil's democracy has grown,
Speaker 1: and so they'll go with either a more conservative coalition
Speaker 1: and more more progressive coalition m but what they want
Speaker 1: our posts and what they want our financial resources. So
Speaker 1: he also has the challenge within his own party one
Speaker 1: of pushing forward to perform agenda, which he said he
Speaker 1: will do, and he put forth a paper last at
Speaker 1: the end of last year saying that this is what
Speaker 1: he would do if he came into power. But he's
Speaker 1: going to be a bit at his own party, of
Speaker 1: which there's many mayors, there's many local representatives who are
Speaker 1: going to be searching for state resources, particularly as Brazil
Speaker 1: heads to its own midterm elections in mayoral elections which
Speaker 1: come up next October. I looked and as you know
Speaker 1: in the blocks that we have with you today this
Speaker 1: half hour, tell me about the adjacent effects that we see,
Speaker 1: the adjacent effects that we see on South America. Does
Speaker 1: it have a knock on effect or is Brazil a
Speaker 1: discreet moment? Just for Brazil, it has knock on effect.
Speaker 1: And probably the biggest knock on effect we will see
Speaker 1: is in Argentina, and that is right now a much
Speaker 1: better story. Right we had twelve years under the kation
Speaker 1: of government, also a very populoist government and that has
Speaker 1: come to an end. Madicio Macary now is a their
Speaker 1: center or center right, very market friendly government is trying
Speaker 1: to turn around Argentina. In his first hundred plus days,
Speaker 1: he's unified the exchange rate, he's reduced subsidies, he's resolved
Speaker 1: the problems with the debt holdout. He's really bringing Argentina
Speaker 1: back to him, to the markets, the global capital markets.
Speaker 1: But Brazil is Argentina's largest trading partner, and so what's
Speaker 1: happening in Brazil is hitting the Argentine economy and particularly
Speaker 1: it's manufacturing sectors as automotive and other manufacturing sectors because
Speaker 1: they're so linked. So Argentina tries to climb out of
Speaker 1: its own economic problems and is making the right steps
Speaker 1: reform wive policy wife to do so, they're getting hit
Speaker 1: by what's happening in Brazil. The question then becomes how
Speaker 1: quickly does Brazil get over this um or are we
Speaker 1: going from the frying pan to the fire. You know,
Speaker 1: I don't see a quick turnaround in Brazil. We saw
Speaker 1: the markets are happy about this, the realit has been
Speaker 1: strengthening over the last week or so. Because of this.
Speaker 1: The other markets are are jumping up but I think
Speaker 1: this is a longer term prospect. And Brazil it may
Speaker 1: be an interim government that can make a few reform
Speaker 1: that are necessary, but they're really going to have to
Speaker 1: wait till you get democratic legitimacy back, and that might
Speaker 1: be when we see another presidential election coming up. Will
Speaker 1: continue with Shannon on Neil. Dr O'Neil. She's the only
Speaker 1: one in the nation, Mike who has priced out the
Speaker 1: wall between the US and Mexico to the square foot.
Speaker 1: She waited across the Rio Grant to figure out the
Speaker 1: price of the wall. Uh. We'll talk to Shannon neal
Speaker 1: about Mexico. This is a with great respect, particularly for
Speaker 1: all of our listeners on serious next m across the
Speaker 1: Great Southwest and into Texas. This is uh a huge
Speaker 1: topic and we'll talk to Shannon O'Neil about it. Mike,
Speaker 1: what do you have over there? What do you see? Well,
Speaker 1: just seeing no real reaction to the home builders numbers
Speaker 1: this morning, and a lot of reaction continues at least
Speaker 1: an equity markets to oil prices. Uh, you know they're
Speaker 1: they're dragging down equities again today. But on a four eighteen,
Speaker 1: you wonder how the economy gets into April. We'll be
Speaker 1: didn't get some glimmers of that. We'll do that for
Speaker 1: you much of the week. The down negative sixty two
Speaker 1: the first print on the vix al point seven seven
Speaker 1: point move fourteen thirty nine. Our surveillance has brought to
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Speaker 1: Michael Barr with lose headlines My time. The death toll
Speaker 1: from this weekend's earthquake and Ecuador is at two hundred
Speaker 1: seventy two. Buildings were flattened by the devastating seven point
Speaker 1: eight earthquake along the Pacific Ocean coast. World leaders from
Speaker 1: Washington to the Vatican are offering their support to Ecuador.
Speaker 1: It was on this day in nineteen o six the
Speaker 1: devastating San Francisco earthquake took place. This is the first
Speaker 1: year where all of the survivors of the quake are gone.
Speaker 1: Texas Senator Ted Cruizes, responding delegations from Republican arrival Donald
Speaker 1: Trump that Cruiz is trying to steal the presidential nomination
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Speaker 1: s stocks are joining a decline in global equities, and
Speaker 1: currencies of commodity exporting nations are slumping as scrude oil
Speaker 1: tumbles after talks between major producers ended in Doha without
Speaker 1: any agreement on limiting output. We checked the markets every
Speaker 1: fifteen minutes throughout the trading day on Bloomberg, and the
Speaker 1: S and P five hundred is down to tenths per
Speaker 1: cent or three points to seventies seven. Now Jones industrial
Speaker 1: average down less than a tenth of upper center twelve
Speaker 1: point us to seventeen thousand, eight hundred eighty five. Then
Speaker 1: as dacts down four tenths per cent or seventeen points
Speaker 1: to forty nine twenty ten. Your treasury down seven thirty seconds.
Speaker 1: The yield one point seven seven percent yield on the
Speaker 1: two year point seven four percent NIMEX. Screude oil down
Speaker 1: three and a half percent or a dollar forty to
Speaker 1: thirty eight nineties six of barrel comes gold up three
Speaker 1: tenths per cent, or four dollars twenty cents at twelve
Speaker 1: thirty nine an ounce, the euro a dollar thirteen o two,
Speaker 1: and the yen is at one oh eight point eight zero.
Speaker 1: Morgan Stanley joining the parade of Wall Street banks that
Speaker 1: beat profit estimates by cutting costs to counter a drop
Speaker 1: in revenue from fixed income and equities trading. It shares
Speaker 1: now down about three tenths percent at twenty five dollars
Speaker 1: seventy cents. Confidence among US home builders was little change
Speaker 1: in April, indicating the housing market lack momentum as the
Speaker 1: spring selly selling season got under way. And that's a
Speaker 1: bloom bird business flash. Tom and Mike Karen, thank you
Speaker 1: so much. This is something I've really looked forward to.
Speaker 1: Shannon O'Neill, he was provided, say, anthing on international relations,
Speaker 1: migrating celts from the United States, on Cuba, on Brazil,
Speaker 1: as we've been talking on our main focus, which is Mexico.
Speaker 1: Shannon and I say this with great respect for both
Speaker 1: sides of the debate. Is the discussion about a quote
Speaker 1: unquote wall on the border that much different now than
Speaker 1: in two thousand six ten years ago. You know, some
Speaker 1: of the rhetoric is a bit different, and some of
Speaker 1: the descriptions of Mexicans and why we need a roll
Speaker 1: is a bit different. But we did see from two
Speaker 1: thousand and six on, after the elections and and after
Speaker 1: some of the discussions, we saw a big build up
Speaker 1: in spending on the US Mexico border. We saw a
Speaker 1: huge increase in the number of people of patrols, of
Speaker 1: customs and border officials there. So we have been as
Speaker 1: a country, United States, with bipartisan support investing in security
Speaker 1: allowing along that border. And we do have a wall,
Speaker 1: some seven hundred miles worth of wall in areas that
Speaker 1: makes sense to actually have a wall. And I think
Speaker 1: there's a lot of discussions and papers written about whether
Speaker 1: a wall along the whole two thousand mile border makes
Speaker 1: any sense in terms of economics and in terms of
Speaker 1: what we actually want to do. But this is an
Speaker 1: area actually the United has invested pretty significantly over the
Speaker 1: last ten years to increase security there. And Mike, this
Speaker 1: comes out of HR. Four four three seven, the Border Protection,
Speaker 1: Anti Terrorism and Illegal Immigration Control Act, which I believe
Speaker 1: was two thousand five, which I'm afraid to ask Dr
Speaker 1: on you know how many thousands of pages? Was that
Speaker 1: way too many? I want to go back even farther.
Speaker 1: We had an amnesty program largely built around agricultural workers.
Speaker 1: But what impact did that have? Is there any learning
Speaker 1: experience there? There is? So under President Reagan, we had
Speaker 1: a bill, or we had a law that granted a
Speaker 1: paptist citizenship for many many undocumented immigrants in the United States,
Speaker 1: and there were just over two million that were Mexicans um.
Speaker 1: And what's quite interesting about that is many did uh
Speaker 1: get a green card, did become part of our process,
Speaker 1: but actually many fewer became U. S. Citizens. And I
Speaker 1: think either side of the aisle would have fought, and
Speaker 1: so we only had about a third of those people.
Speaker 1: So now right, that's almost thirty years ago, only about
Speaker 1: a third of those actually became U. S. Citizens. And
Speaker 1: that does give some evidence for this idea that's out
Speaker 1: there that Mexicans come here, they want to work, they
Speaker 1: want to provide security for their family, and then they
Speaker 1: want to go home when they've finished that part of
Speaker 1: their career, and they provided some money back home. And
Speaker 1: that was what played out back in six and in
Speaker 1: the preceding years, and could again if we had another
Speaker 1: comprehensive immigration reform that would give a pactic citizenship in
Speaker 1: sixty six mile fence along the California coast from San
Speaker 1: Diego to the Pacific Ocean. Well, we've had a series
Speaker 1: of fences and another one in the last couple of years, Um, Shannon,
Speaker 1: they don't seem to make much of a difference. This
Speaker 1: isn't really the way to patrol the border. And as
Speaker 1: Janet Napolitana when she was governor down there and then
Speaker 1: she went on to be a head of Homeland Security,
Speaker 1: she had a quipped that said, you know, show me
Speaker 1: a fifty football and I'll show you a fifty one
Speaker 1: f ladder. And so this isn't necessarily the way to
Speaker 1: get the security that we want. Um, But we have
Speaker 1: I said, we've invested a lot. We've invested in people,
Speaker 1: we've invested in technology, and we have seen a decline
Speaker 1: in the people coming over the border. Part of that economics,
Speaker 1: but part of it is the security that's put put
Speaker 1: in place over this last decade. Well, obviously this is
Speaker 1: all in the fertile mind of one Republican candidate who
Speaker 1: doesn't seem to understand how any of this works. But uh,
Speaker 1: if if if he were elected and seems to be
Speaker 1: a small chance of that UH and wanted to stop remittances,
Speaker 1: would that be possible. It would be very difficult. Um.
Speaker 1: These are individual transactions from private individuals to private individuals
Speaker 1: in the other countries, so they don't really flow through
Speaker 1: governments as such. Um it would be a huge hit
Speaker 1: for companies like Western Union and others, but perhaps also
Speaker 1: for banks because there'd be more regulation and trying to
Speaker 1: decipher what is remittance versus what is a general transaction
Speaker 1: that's going between these two countries. And we also have
Speaker 1: to remember, over the last twenty plus years, the amount
Speaker 1: of trade, the commerce the companies that work on both
Speaker 1: sides of the border has exploded. There's over half a
Speaker 1: trillion dollars worth of goods that moves back and forth
Speaker 1: every year, and so there's a lot of money moving
Speaker 1: back and forth to keep factories open on both sides
Speaker 1: of the border. Social there's a lot of flows, and
Speaker 1: you're trying to pull out a very few and see
Speaker 1: which ones are happening between people who are undocument in
Speaker 1: the United States, and and it's a very complicated process.
Speaker 1: They have a sane discussion on this hugely emotional issue
Speaker 1: with your expertise and deserve it a claim. If Shannon
Speaker 1: O'Neill of that incredibly leftist New York City group CFR
Speaker 1: parachuted into the Latin American Studies program of the University
Speaker 1: of Arizona, Tucson, Arizona, what's the debate you perceive among
Speaker 1: the Americans most invested in this border debate? What would
Speaker 1: you what would we see or you see among the
Speaker 1: people of Arizona. You know, I was down there speaking
Speaker 1: just a couple of months ago, and what's really fascinating
Speaker 1: to me is the debating Arizona seems to be moving
Speaker 1: away from where it was a few years ago when
Speaker 1: they passed a law to to go after anybody who
Speaker 1: might possibly be undocumented, and really cracking down on that part.
Speaker 1: And what you see the businesses, they're big ones, but
Speaker 1: also a medium and small sized ones. They see their
Speaker 1: future link to Mexico. Now when they look for consumers,
Speaker 1: it's a small state, not a big population. When they
Speaker 1: looked at who they could sell to, Mexico is at
Speaker 1: the top of their list, right, There's lots of consumers
Speaker 1: on the other side of that border. So I do
Speaker 1: think even in states like Arizona, which became the poster
Speaker 1: child for an anti American point of view. You're seeing
Speaker 1: a huge shift there. They see the benefits of trade
Speaker 1: with Mexico and the benefits of the back and forth growing.
Speaker 1: Let's be realistic here and talk about what's likely to happen. Uh,
Speaker 1: it is likely that Hillary Clinton will be elected president UM.
Speaker 1: Where then does the US Mexico relationship go? Where are
Speaker 1: we now and where does it go? Well? Ley Clinton
Speaker 1: has spent a lot of time when she was Secretary
Speaker 1: of State working with Mexico. Under her tenure, there was
Speaker 1: an expansion and revamping of the Meriden Initiative, which is
Speaker 1: the security cooperation that between the two countries begun under
Speaker 1: President Bush. Um. She's spent a lot of time on
Speaker 1: immigration issues. We've heard that a lot on her campaign
Speaker 1: in the past, and obviously Mexicans and Mexican Americans are
Speaker 1: a big part of that. So I think those two
Speaker 1: things push forward. I mean, one of the big questions
Speaker 1: is what happens on trade. This is obviously quite important
Speaker 1: between our two nations. We see not just a lot
Speaker 1: of back and forth, which I mentioned, but also really
Speaker 1: the integration of companies where something is made in Mexico
Speaker 1: something in the United States and has put together on
Speaker 1: one side of the border or the other. So I
Speaker 1: think there's a real question under a quipent administration what
Speaker 1: happens to TPP, of which Mexico and many other countries
Speaker 1: are apart um. But I do think we see a
Speaker 1: pretty positive relationship. We see the continuation of Obama's deepening
Speaker 1: of the relationship between the two countries and moving forward
Speaker 1: on on many sides. One final question quickly, if we
Speaker 1: could have mentioned Corl Scodiers the other day, is someone
Speaker 1: maybe with a different view, former Secretary of Commerce within
Speaker 1: the Republican Party. Where do these people go in the
Speaker 1: debate after November? Where does the establishment Republican Latin American debate?
Speaker 1: Where do they head after what we've observed and after
Speaker 1: what we do to get to election? And I think
Speaker 1: that's the big question for Republicans in general, where do
Speaker 1: you head after election night depending on who becomes their
Speaker 1: candidates the two leading ones today um and whether one
Speaker 1: of those could possibly win. But there is my impression,
Speaker 1: is a feeling that there will have to be a
Speaker 1: bigger national conversation here about what the two parties want
Speaker 1: to represent because overall, in in my take, three of
Speaker 1: the five leading candidates are anti establishments figures. So obviously
Speaker 1: I'm both side of the aisle. There are people who
Speaker 1: feel are not being represented by the traditional party, Doctor Ornill,
Speaker 1: thank you so much. Shannon O'Neill, and folks can't say
Speaker 1: enough about her book on UH Mexico, Two Nations, UH
Speaker 1: Indivisible Mexico and the United States. Just a superb one
Speaker 1: volume read on all of Mexico. Michael, what a great
Speaker 1: way to start the week, Daniel Jurgen, Shannon O'Neill, Phil Ler, Yeah,
Speaker 1: I mean it's just been and Richard huss we don't
Speaker 1: leave him aside. And it is the week of the
Speaker 1: Queen's birthday. We will celebrate here. We'll talk a little
Speaker 1: bit about it. We've got, of course economics this week.
Speaker 1: I will go beneath the headline data on the housing economy.
Speaker 1: We are produced by Kieren Juchanon ken Felly, our global
Speaker 1: technical director. It's Bloomberg Surveillance