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

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Speaker 1: Bloomberg to Boston, BLUEMBERG twelve honors, to San Francisco, Bloomberg

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Speaker 1: to the country at JAM Channel one ninety and around

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

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Speaker 1: This is Bloomberg Surveillance. Good morning, It's say thirty on

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Speaker 1: Wall Street. I Michael McKee along with Tom Keene Economic

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Speaker 1: Indicators brought to you by Commonwealth Financial Network. When it's

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Speaker 1: time to change the conversation, talk with a broker dealer

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Speaker 1: r I A that's ready to listen, call four six,

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Speaker 1: two three eight or visit Commonwealth dot com to learn more.

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Speaker 1: The only number At eight thirty, the Chicago Fed National

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Speaker 1: Activity Index falls to negative point to nine from positive

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Speaker 1: point to eight. The big news of the day at

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Speaker 1: ten o'clock existing home sales forecast to be down. Three. Tom,

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Speaker 1: You've got some breaking news here. Well, I guess it's

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Speaker 1: breaking news. It's sort of non news, valiant news pending

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Speaker 1: and to review. And and I thought we did some

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Speaker 1: great work on this a number of days ago, seventy

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Speaker 1: to fifty four to thirty one to twenty nine closing

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Speaker 1: just under twenty seven and right now down four point

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Speaker 1: five five point seven seven. Mike, what I would state

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Speaker 1: that's critical is this stock it's yet to find a

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Speaker 1: bid in four or five, two multuous days. Two more

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Speaker 1: downgrades today. Uh so the stock in in trouble. Barclay's

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Speaker 1: and MISSOI downgrading the stock to Barclays to equal weight

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Speaker 1: from overweight and Missoo to underperformed from you, Well, there

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Speaker 1: it is, and uh we'll keep you up to date

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Speaker 1: on this as we see news come and the news

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Speaker 1: less pending in the coming hours. We've got a Midwest

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Speaker 1: focus this morning. Thank you to David Harrow of Chicago

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Speaker 1: with Oak Mark for his perspective. Right now, Diane Swonka

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Speaker 1: joins us in Chicago. Is what, Diane. Wonderful, wonderful, wonderful

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Speaker 1: to have you on um. Just to start with the

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Speaker 1: the the essence of DS economics in your view of

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Speaker 1: industrialized America. Are we in manufacturing recession? You know, actually

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Speaker 1: the manufacturing sector looks like it's starting to bottom out

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Speaker 1: now and come back a bit. So we were certainly

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Speaker 1: in some parts of the manufacturing sector in a recession.

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Speaker 1: As collateral damage from the oil price bust hit particularly

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Speaker 1: in the steel industry, and also had collateral damamage in

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Speaker 1: the transportation industry, which is big here in Chicago. Everything

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Speaker 1: from trucks to the rail industry was carrying around stuff

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Speaker 1: for the shale industry. On the flip side of it,

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Speaker 1: of course, the ail industry had held up. Now we're

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Speaker 1: looking at May manufacturing industries that are starting to firm

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Speaker 1: a little bit. In last month, the industrial production numbers

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Speaker 1: actually came up a bit from manufacturing activity. The weakness

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Speaker 1: was in things like utility and mining. So it does

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Speaker 1: look like we're crawling our way back. That's the good news.

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Speaker 1: The bad news news crawl. We're not running. This isn't

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Speaker 1: the sprint, and it's not even a marathon yet. This

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Speaker 1: is an industry that's been hit hard by this drink

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Speaker 1: of the dollar, and that's one of the things, of course,

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Speaker 1: that the Federal Reserve took into account last week. One

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Speaker 1: of the things we haven't talked a lot about, and

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Speaker 1: I haven't seen a lot of discussion about, is yes,

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Speaker 1: we all have the statistics on manufacturing dropping because of

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Speaker 1: the problems in the energy sector, but as uh those

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Speaker 1: jobs go away, that has a knock on effect on

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Speaker 1: other jobs and other businesses in those economies. That's exactly right.

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Speaker 1: One of the things the manufacturing sector, even though the

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Speaker 1: number of jobs and manufacturing have fallen quite dramatically over

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Speaker 1: the last thirty to forty years, and it's not the

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Speaker 1: kind of sector at once was as a backbone of

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Speaker 1: the U. S economy. We've moved more to a service economy.

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Speaker 1: Many of the service sector jobs are actually dependent on

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Speaker 1: jobs in the manufacturing sector, and you do have spillover effects.

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Speaker 1: What's been interesting to see is how strong overall employment

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Speaker 1: games have hold up in recent months, given the weakness

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Speaker 1: we've seen in overall manufacturing activity, the weakness we've seen

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Speaker 1: also in retail trade if we believe the data, and

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Speaker 1: I'm starting to have my own doubts about the believability

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Speaker 1: of some of this data. Um In terms of retail spending,

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Speaker 1: the consumer has not exactly been out spending with a

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Speaker 1: lot of gusto on a lot of a lot of

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Speaker 1: stuff recently, with the exception of sort of food services

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Speaker 1: and accommodations. They are they are again still spending, and

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Speaker 1: that's where the oil dividend is. But it really is

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Speaker 1: kind of surprising to see some of the weakness in

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Speaker 1: retail sales. We've seen. Also, what's the most important number

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Speaker 1: that you're watching these days that would tell us something

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Speaker 1: about where the economy is. Is it Michigan? Are they

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Speaker 1: in the bracket this year? The most important numbers of

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Speaker 1: course employment, but I would say wages, now we really

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Speaker 1: need to know. Is that a thermometer of how well

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Speaker 1: the labor market is doing? Are they accelerating? I think

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Speaker 1: it's important that Cherry yell And also pointed out we've

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Speaker 1: not seen as much wage acceleration as we would like.

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Speaker 1: I think. I think that's one of the key issues,

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Speaker 1: is wage accelerating. This is a key point we're talking

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Speaker 1: folks earlier with ben Emmon's about CPI and overshoot? Uh

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Speaker 1: Dr Swark, are you saying that wage inflation forget about overshoot?

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Speaker 1: Isn't even green shooting yet? I wish there was a

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Speaker 1: little green shoots out there may be a little bit.

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Speaker 1: I think what we're seeing in the inflation numbers is

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Speaker 1: we have seen to pick up and healthcare inflation. And

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Speaker 1: that's related to both and increasing coverage through the Affordable

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Speaker 1: Care Act. It's also related to some losses in the

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Speaker 1: Affordable Care Act. Can they've increased premiums, and we've seen

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Speaker 1: that show up in all of us having to pay

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Speaker 1: a lot more for our healthcare, which could have sort

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Speaker 1: of a knockoff effect of them people cutting back on

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Speaker 1: healthcare spending going forward because they're having to pay more

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Speaker 1: of it themselves. I think that's really important. But you know,

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Speaker 1: we really are not in that wage spiral yet out

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Speaker 1: wage based inflation, and we should see some some inflation

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Speaker 1: pick up as oil prices bottom out and the drag

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Speaker 1: of import prices plays out. We should see those things

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Speaker 1: have a little hotter inflation, warmer at least, but we're

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Speaker 1: still barely at a temperature living. We're talking about the

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Speaker 1: economic data this week, and I guess housing gets the focus,

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Speaker 1: but I noticed durable goods of the back end. Give

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Speaker 1: us an update on the knowledge you glean from durable goods.

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Speaker 1: You know, durable goods is really important because it gives

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Speaker 1: us a sense of what are we willing to bet

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Speaker 1: going forward? Are we willing to make an investment in machinery,

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Speaker 1: equipment and productivity growth? This is of course one of

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Speaker 1: the real Achilles heel of the economy in the last

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Speaker 1: couple of years of slow down and productivity growth. Productivity growth,

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Speaker 1: you can't get increases and living standards and sustained increases

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Speaker 1: and wages that are less inflationary over time. And right

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Speaker 1: now we're hoping to see again a little upside surprise

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Speaker 1: that durable goods, that core capital goods number coming back.

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Speaker 1: It looks like we've worked through some of the declines

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Speaker 1: when you when you cut everything you can cut in

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Speaker 1: the oil industry. In terms of investment, it's no longer

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Speaker 1: a head when you're at the bottom of the barrel.

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Speaker 1: It's not necessarily good news, but at least that part

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Speaker 1: of it, it looks like we're starting to see some

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Speaker 1: of this other bit of an activity in the manufacturing

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Speaker 1: sector come back in self investment. But some us of Michigan,

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Speaker 1: Michigan upset by Notre Dame. None of it matters Notre

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Speaker 1: Dame because Mike I had West Virginia like almost the

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Speaker 1: whole way. I mean, I I got, I just I'm

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Speaker 1: speechless over my bracket. Today, this hour of surveillance is

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Speaker 1: brought you by Vaulto Cars, White Planes. Visit Vaulto Cars,

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Speaker 1: White Planes dot com. Here's Michael Barr with news headlines. Mike, Tom,

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Speaker 1: thank you very much Today, President Obama will sit down

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Speaker 1: with Cuban President Roul Castro. Yesterday, the President arrived in Cuba,

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Speaker 1: but the First Lady and his two daughters. It is

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Speaker 1: the first time a sitting president visited Cuba in almost

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Speaker 1: ninety years. The president was asked by ABC News, why

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Speaker 1: is today the right time for him to visit Cuba?

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Speaker 1: Although we still have significant differences around human rights UH

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Speaker 1: and individual liberties inside of Cuba, we felt that coming

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Speaker 1: now would maximize our ability extense more changed. Before leaving

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Speaker 1: Cuba tomorrow, President Obama plans to meet with political dissidents.

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Speaker 1: Donald Trump's campaign says will land security to larger events.

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Speaker 1: The decision is so campaign staffers do not assist in

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Speaker 1: removing protesters. Russian investigators say they can't immediately read data

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Speaker 1: from the flight recorders of a Dubai plane that crashed

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Speaker 1: in southern Russia on Saturday, killing all sixty two on

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Speaker 1: board and aviation officials. Says that the black boxes from

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Speaker 1: the fly Dubai plane have been damaged so much that

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Speaker 1: experts have not been able to read the data. Global

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

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Speaker 1: four hundred journalists and more than a hundred fifty news

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Speaker 1: bureaus from around the world on Michael bar Mike Tom,

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Speaker 1: Thank you, Michael. Time now for the Ricotina on a

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Speaker 1: group Bloomberg NBC Sports Update with Jones Dash Mike. Late

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Speaker 1: night drama in the n C Double A Tournament in St. Louis,

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Speaker 1: Wisconsin is going to the final four the last two years.

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Speaker 1: Was in deep trouble, but ronson kanag tide Xavier with

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Speaker 1: a three point of eleven seconds left and then hit

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Speaker 1: another one at the buzzer. The Badgers won sixty six

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Speaker 1: sixty three, so Xavier the second to seed to be ousted.

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Speaker 1: All the ones still alive, although Oregon needed to come

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Speaker 1: back to meet St. Joe's sixty nine sixty four. The

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Speaker 1: Ducks the only pack twelve team left of the six

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Speaker 1: are gone. A CC has been amazing, going twelve and

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Speaker 1: won six of the Sweet sixteen Syracuse seventy five to

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Speaker 1: fifty route of Middle Tennessee, Notre Dame as seventy six

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Speaker 1: seventy five Squeaker over upset minded Stephen F. Austin, Texas,

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Speaker 1: A and M trailed Northern Iowa by twelve with under

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Speaker 1: forty seconds to go by five with fourteen seconds left.

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Speaker 1: The Aggies finished regulation on a fourteen to two run.

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Speaker 1: They won in double overtime ninety two to eighty eight,

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Speaker 1: biggest collapse over a final minute in tournament history, and

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Speaker 1: Northern Iowa suffers the agony of defeat. Forty eight hours

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Speaker 1: after the thrill of victory. They had one Friday on

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Speaker 1: a shot from mid core Nicks now fifteen under five hundred.

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Speaker 1: They meet meeaten by Sacramento with the Guarden eighty Carmelo

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Speaker 1: Anthony didn't play Junitil Migraine Nicks o and eight without

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Speaker 1: him Devil's top Columbus to one on the Davante Smith

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Speaker 1: Pelly goal third period making a winder. It's Scott Wedgwood

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Speaker 1: in his NHL debut with the Bloomberg NBC Sports Update. John,

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Speaker 1: thanks for the reminder of the agony defeat. The thrill

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Speaker 1: of victory is Scarlet Foods bracket over a TV news

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Speaker 1: that they've put together. Different television people and radio people

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Speaker 1: that do this. In my Scarlet Food is out distancing all.

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Speaker 1: Congratulations to Scarlett it is. I don't have no idea

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Speaker 1: what the pixie does. It is to do with Harry

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Speaker 1: Potter and Wizardry and all that. I don't know she's

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Speaker 1: next year. I need to talk to her this morning

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Speaker 1: about salvaging my bracket. Right on the screen green earlier, negative,

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Speaker 1: screed ow features negative twenty. We're watching oil now green,

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Speaker 1: but it was a little light earlier. I'm gonna call

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Speaker 1: it a decided churn. Waiting for news and waiting for data.

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Speaker 1: We do that. Diane Swak with us from DS Economics.

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Speaker 1: This is Bloomberg surveillance. This ports report was brought to

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