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Speaker 1: This is Bloomberg Surveillance. We do believe that there's an

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Speaker 1: earnings recession at the bank space this year and next year,

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Speaker 1: so earnings are going to be under pressure for the

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Speaker 1: next two years. Does oil catch up with copper, and

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Speaker 1: as copper catch up with oil, we would say that

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Speaker 1: copper is going to catch up with oil to the

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Speaker 1: downside movement of the Yan versus then in the last

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Speaker 1: nine months or so, I think it's one of those

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Speaker 1: factors that's pushing the Japanese economy back into recession. Bloomberg

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Speaker 1: Surveillance your link to the world of economics, finance, and

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Speaker 1: investment on Bloomberg Radio. Good morning, Michael McKee along with

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Speaker 1: Tom Keene. It's seven am on Wall Street two pm

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Speaker 1: in Doha, where they're getting ready for Sunday's summit of

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Speaker 1: oil producing nations. The idea is agreement to freeze oil production.

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Speaker 1: Will it happen? Well, One of the bigger producers, Iran,

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Speaker 1: isn't sending its oil minister that announcement, sending oil prices down.

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Speaker 1: This morning, West Texas seven is off two percent, forty

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Speaker 1: three oh seven off one point eight percent, and as

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Speaker 1: we know lately, when oil prices fall, stocks fall, and

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Speaker 1: it's a down day around the world. Tokyo off four tenths.

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Speaker 1: In Europe the stock six hundred is off by two

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Speaker 1: points now half a percent. The decks is down by

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Speaker 1: sixty four points, seven tenths of eight percent. Here in

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Speaker 1: the US, futures lower s andp EVENI features of five

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Speaker 1: points to tents. DAL futures thirty points lower. That's two tenths,

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Speaker 1: and it's a two tents drop. For nastac E mini futures,

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Speaker 1: they are down by eleven points a tenure not yelled

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Speaker 1: this morning, one point seven seven percent little change five

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Speaker 1: year one point to three seventy six basis points for

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Speaker 1: your two year. The dollar index ninety four seven seven

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Speaker 1: two off a little bit, the end one ninety five,

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Speaker 1: the year O one twelve eighty one stronger today the

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Speaker 1: pound one eighty seven something that isn't affecting markets all

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Speaker 1: that much. Today. China reporting it met its GDP target

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Speaker 1: in the first quarter, a six point seven percent annual growth.

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Speaker 1: Why can't the Iranians go to Doha? It's an hour

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Speaker 1: and forty four minutes. It's like taking the Delta shuttle.

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Speaker 1: I think there's a traffic jam on the freeway or

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Speaker 1: something like that. They're gonna send a lower ranking minister.

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Speaker 1: It's the helix all those Uh yeah, well, the Bloomberg

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Speaker 1: traffic report for Doha. Uh. It is an interesting situation

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Speaker 1: that while oil has maintained its correlation to equity performance,

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Speaker 1: markets seem to have put China on the back burner.

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Speaker 1: Remember both of those things totally taking out equity markets.

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Speaker 1: In January, Charles Dumas, chairman of Lombard Street Research, Charles,

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Speaker 1: the mood seems to be different. We're still paying attention

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Speaker 1: to oil, but other factors have settled down a little

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Speaker 1: bit compared to the way we started the year. Yeah. Well,

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Speaker 1: and the Chinese GDP number is quite a strong one

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Speaker 1: and they obviously um it did cred a bit of

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Speaker 1: stimulus fiscal stimulus in the in the first quarter of

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Speaker 1: the year. So you've got a growth rate which are

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Speaker 1: not we recalculate Chinese TV being the last year cover

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Speaker 1: of years now, our recalculation has shown the rate has

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Speaker 1: been more in the region of three percent or four

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Speaker 1: percent for the growth rates against the official six or seven.

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Speaker 1: But this one we can we calculate on a quarterly

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Speaker 1: basis as being six or about a seven cent annual rate.

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Speaker 1: Actually it's a domestic ard is quite strong. Is it sustainable?

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Speaker 1: As I guess the question for investors is is China

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Speaker 1: out of the woods, Not that they won't have some fluctuations,

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Speaker 1: but is the idea of a hard landing now off

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Speaker 1: the table. I don't think we never thought of what

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Speaker 1: was going to be a hard landing um and so

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Speaker 1: in that sense, UM I would say, yes, it is

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Speaker 1: off the table. But on the other hand, what the

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Speaker 1: growth rate we've just had announced this morning is not

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Speaker 1: just anable because they represents the run up of debt,

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Speaker 1: and it was the debt run out which was forcing

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Speaker 1: them onto a more sensible um basic policy of trying

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Speaker 1: to start the successive capital spending. Well, you know, so

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Speaker 1: debt run up continues, and that means they'll have to

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Speaker 1: calm down again. But I don't think that's necessarily a

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Speaker 1: dishaster for the loalth Econnova, Charles Dumar with his Slumber

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Speaker 1: Research Good morning, have you won? Bloomberg Surveillance is always

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Speaker 1: even this Friday, brought you by Investco, explore what high

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Speaker 1: conviction investing means to invest Goose value equity managers watch

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Speaker 1: the conversation. Do that and investco dot com slash interactive

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Speaker 1: smart Talk. They're on value and deep value investing. Charles

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Speaker 1: Duma with us, Charles, you need another victory lap right now.

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Speaker 1: You have been brilliant on dampen g DP worldwide. You

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Speaker 1: also mentioned in the case of Japan an inflection point.

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Speaker 1: Are we at an inflection point in Europe? In a

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Speaker 1: round on the world where policymakers they're all in Washington

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Speaker 1: where they say, let's do something, are we any closer

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Speaker 1: to do something about the real economy? Well, I'm I'm

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Speaker 1: a bit more automistic than consensus on Europe actually, because

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Speaker 1: the the consumer demand has been growing pretty steadily now

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Speaker 1: for and above chand right by their standards, which is

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Speaker 1: pretty slow, and so it's been growing one and half

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Speaker 1: to two percent for about two or three years now.

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Speaker 1: And the world trade is steadied up, so that that

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Speaker 1: is that will help and and on the export side

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Speaker 1: that is, and in the meantime there's a little bit

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Speaker 1: of capex growth over there. So it seems to me

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Speaker 1: that the Aurozone economy, UM, I think drag is frankly

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Speaker 1: um fighting for Italy rather than the Eurozone. At this point,

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Speaker 1: the Aurozone doesn't need native interest rates, but Italy probably does.

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Speaker 1: Um and and so I would pay so much attention

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Speaker 1: to what he's doing now, and you can see that

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Speaker 1: he is like crazy, and the euro goes up and

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Speaker 1: the same goes to the end of that matter. Well,

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Speaker 1: when you're looking at the Eurozone, it seems we can

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Speaker 1: never get away from the issue of Greece. The I

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Speaker 1: m F meeting this weekend in Washington, and it was

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Speaker 1: one of the major topics people were asking Madame Legarde

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Speaker 1: about is Greece really still a big deal for the

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Speaker 1: Eurozone economy? I don't think so. No. I think that

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Speaker 1: it's a big deal for the politics because it's all

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Speaker 1: very symbolic as to whether you're in the ural or

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Speaker 1: not and obeying the German rules or not, and all

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Speaker 1: of that kind of thing, and they attatch a lot

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Speaker 1: of importance to that at this sort of the sort

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Speaker 1: of I well, the vulgar phrases for the sort of

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Speaker 1: thing that's going on on the top level in terms

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Speaker 1: of competitive activity, um and you know, that's one thing.

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Speaker 1: But at the level of the economy, preach doesn't matter,

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Speaker 1: and in fact is growing a little bit. So it's

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Speaker 1: it's kind of a neutral factor. Charles, we had to

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Speaker 1: set a debate with ken Rogar Finnimposing and Surveillance and

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Speaker 1: Television about the idea of the horse and the cart

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Speaker 1: to monetary authorities have to reflate and overshoot to a

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Speaker 1: higher inflation rate to jump start fiscal policy or does

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Speaker 1: anti austerity fiscal spending need to occur to assist in

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Speaker 1: reflating to a better animal spirit m I'm not I'm

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Speaker 1: not really in either camp on that. It seems to

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Speaker 1: me the main thing that's happened is that the um

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Speaker 1: collapse of oil prices, the sharp production of Chinese goods prices,

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Speaker 1: the sharp production of iron or metals, all the rest

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Speaker 1: of it um is has a had an initial harmful

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Speaker 1: effect on the producers and has done a lot of

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Speaker 1: damage over the last year and a half. But if

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Speaker 1: you look at the version of consumers worldwide, it's very

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Speaker 1: much improved and we're beginning to see the consumer spending

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Speaker 1: coming through. So to me, the it's the structural shift

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Speaker 1: in prices, which is a moderately optimistic factor for the

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Speaker 1: for the world economy. And you know is they as

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Speaker 1: they went for more fiscal stimulars that might help to

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Speaker 1: sort of kick started a little bit, and that would

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Speaker 1: be good. The monetary business is obviously completely shot through

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Speaker 1: either there is absolutely nothing left in the locker and

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Speaker 1: any all this talk about helicopter money is simply m

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Speaker 1: fiscal policy of another inefficient kind. The structural shift in

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Speaker 1: prices you talk about, is that based basically an oil

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Speaker 1: prices or is there actual signs that in Europe prices

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Speaker 1: are going to rise outside of energy. Well, I'm I'm

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Speaker 1: talking about the benefits of falling prices here. We we

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Speaker 1: don't belonged to the camp that says you need to

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Speaker 1: target inflation. I think that's a ridiculous idea to create

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Speaker 1: inflation out of nothing. Um it seems to me that term.

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Speaker 1: The main point here is that the reduction of oil

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Speaker 1: prices even alive of smaller oil company or country imports,

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Speaker 1: and the reduction of iron ore metal prices and cold prices,

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Speaker 1: and of course goods prices out of China, but also

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Speaker 1: the prices of people who are competing with the Chinese.

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Speaker 1: All of these, um, these prices straints are benefiting consumers.

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Speaker 1: So I think that the shift of income to consumers

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Speaker 1: is the key factor. Um and and and should come

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Speaker 1: through with more demands. The real risk in the world

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Speaker 1: economy it lies in things like the US core inflation

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Speaker 1: rates having gone up quite a long way, UM and

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Speaker 1: implying that there are supply constraints, not to mand constraints

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Speaker 1: of the world UM. Charles with us with lumber Street

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Speaker 1: Research will continue this discussion. I thought that was just brilliant.

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Speaker 1: Would Mr Dormans said, folks on the sea quenchal effect

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Speaker 1: of the commodity price collapse we've seen and still, Mike,

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Speaker 1: I'm still not used to forty dollars on the Bloomberg

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Speaker 1: screen for West Texas Intermediate. You think you would be.

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Speaker 1: It's been a good eighteen months. Well, let's put it

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Speaker 1: this way. It's been a very long time since uh

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Speaker 1: barrel of oil costs more than a steak in New

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Speaker 1: York City. I like that that. Can we shift that over?

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Speaker 1: John Tucker to Martini Analysis oil oil to nineteen dollars.

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Speaker 1: Michael barr is looking at me, how'd you get on here?

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Speaker 1: Forty dollars forty seven cents down a dollar three on

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Speaker 1: West Texas European Brent crew forty two seventy nine dollar

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Speaker 1: five US futures negative four this Friday morning, This hour

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Speaker 1: of surveillance brought to by west Chester super Move Is

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Speaker 1: it west Chester suparu dot com. Here's Michael bar with

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Speaker 1: World of national headlines. Tom, thank you very much. Bernie

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Speaker 1: Sanders and Hillary Clinton engaged in a he did two

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Speaker 1: hour debate in New York. The Vermont senator said Clinton's

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Speaker 1: description of certain criminals as super predators when she was

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Speaker 1: a first lady was a racist term. Clinton rejected sanders

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Speaker 1: criticism that she is unqualified, saying she has been called

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Speaker 1: a lot of things, but never that. Continuing clashes between

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Speaker 1: House Republicans and Tea Party lawmakers led missing a deadline

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Speaker 1: to pass their longstalled budget. House Republicans are leaving Washington.

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Speaker 1: Belgium's transport minister has resigned after a secret European Union

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Speaker 1: and report detailing lapses and airport security oversight. It was

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Speaker 1: leaked in the wake of the deadly March twenty second

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Speaker 1: bombings at Brussels airport and subway. Global News twenty four

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Speaker 1: hours a day, powered by our twenty four hundred journalists, him,

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Speaker 1: Michael Barr and Michael thanks so much. We do data

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Speaker 1: checks even on a Friday. The Yen one O eight nine.

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Speaker 1: That's a stronger yen. This morning, the dollar churning a

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Speaker 1: bit weaker. Michael McKee and Tom Keene with Charles Tumat

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Speaker 1: Bloomberg Seving Bloomberg Surveillance, brought you by Bank of America

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Speaker 1: Mary Lynch committed to bringing higher finance to lower carbon

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Speaker 1: name the most innovative investment bank for climate change ensis

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Speaker 1: net ability by the banker. That's the power of Global Connections.

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Speaker 1: Bank of America n A F D I C Global

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Speaker 1: the Radio plus Mobile Act and on your radio. This

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Speaker 1: is a Bloomberg Business Flash and I'm kmeron Moscow. This

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Speaker 1: updates brought to you by National Realty Returns on cash

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Speaker 1: and rented real estate. Find them at n r i

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Speaker 1: A dot net. Oil is falling for a third day

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Speaker 1: before major suppliers meet in Doha to discuss an output freeze,

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Speaker 1: boosting bonds and sending European stocks lower. U S Dock

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Speaker 1: Index futures declining as well. SNP EVENI futures down four points,

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Speaker 1: now EVENI futures down twenty six and nasdac emny futures

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Speaker 1: down nine and a half. The dacks in Germany's down

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Speaker 1: six tenths per set ten, Treasury up seven thirty seconds,

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Speaker 1: the yield one point seven six percent, not x Scrude

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Speaker 1: oil down two and a half percent, or a dollar

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Speaker 1: three to forty dollars. Forty eight cents of barrel comes

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Speaker 1: Goold is up half percent or six dollars to twelve

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Speaker 1: thirty two. The Euro and dollar twelve eighty six, the

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Speaker 1: en one oh eight point nine three. And that's a

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Speaker 1: Bloomberg business flash. Tom and Mike Cara Mosco, thank you

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Speaker 1: very much. We're talking with Charles Duma. He's chairman of

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Speaker 1: Lombard Street Research in London. And being in London, of

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Speaker 1: course you're in the middle of the Brexit debate, which

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Speaker 1: um under British law, officially kicks off today, not that

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Speaker 1: people haven't been talking about it, but just the technicalities

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Speaker 1: of it. They call it the official kickoff. Have to ask, uh,

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Speaker 1: the President of the United States is weighing into this debate,

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Speaker 1: the White House saying yesterday that, uh, it would be

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Speaker 1: very bad for Britain and for the world economy should

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Speaker 1: the British vote to leave the European Union. What kind

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Speaker 1: of impact is as President Obama, who he's coming there

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Speaker 1: next week is he going to have on this debate? Well,

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Speaker 1: I mean, people like Obama still in in in Britain,

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Speaker 1: so that means he's got to have some mild favorable

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Speaker 1: impact in terms of the people who want to stay

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Speaker 1: in the EU. But having said that, I don't think

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Speaker 1: anyone thinks he actually does anything more than reflects an

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Speaker 1: official kind of idea that business as usual is better

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Speaker 1: than any change. Um So you know, I don't think

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Speaker 1: it really amounts to row beans in terms of how

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Speaker 1: people are going to vote. Does uh? Does Lombard Street

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Speaker 1: agree with the president's analysis of the economic impacts of

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Speaker 1: the vote? Um our analysis it's um, it's likely to

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Speaker 1: have very little impact on anything but the very short

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Speaker 1: term that clearly if bit votes to leave, there will

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Speaker 1: be a hot term dip arising from some confident factors

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Speaker 1: and investment factors. In fact, that's probably already guaranteed to

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Speaker 1: happen whatever way people vote, because some some people will

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Speaker 1: have already cut back their plans in anticipation. So in

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Speaker 1: that sense, there's a short term impact, but we don't

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Speaker 1: think that there's going to be any kind of long

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Speaker 1: term effect of substance. Whatever. The main thing is not

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Speaker 1: to be in the euro and ideally not to be

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Speaker 1: in this sheng and three arranging zone, and Britain's not

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Speaker 1: in either. Charles, you're uniquely qualified, particularly esconced at Lombard

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Speaker 1: Street to talk about the fabric of the city and

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Speaker 1: to talk about the elites of the United Kingdom. As

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Speaker 1: we go to this debate in June, it just seems

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Speaker 1: to us over here across the pond and distant and

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Speaker 1: culturally distant, that it's one big elite debate to keep

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Speaker 1: the elites together across was the continent, including the United Kingdom.

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Speaker 1: What does everybody else in England think, Well, I think

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Speaker 1: you're putting a finger on the main point, which is

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Speaker 1: what I think is is perhaps wrongly known as the

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Speaker 1: white working class in in a US context or in

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Speaker 1: a British context, have been some degree and at least

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Speaker 1: perceive themselves to be the victims of a lead policies

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Speaker 1: and particularly um the the mixture of high tech hollowing

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Speaker 1: out of their kind of jobs, the immigration being free

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Speaker 1: throughout Europe and increasing throughout the world and of course

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Speaker 1: much cheaper to get around, and the free trade and globalization,

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Speaker 1: which is that's part of whereby some of the jobs

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Speaker 1: get exported to places where wages are cheaper on the

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Speaker 1: ground anyway, So it's a mobile capital of any other

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Speaker 1: way that does the trick. So whichever way you cut

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Speaker 1: the cake, you know, it's it's the sort of ordinary

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Speaker 1: kind of a guy in the developed econumnies that looks

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Speaker 1: like the loser and feels like the loser. And that's

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Speaker 1: really I think a large part of what this argument

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Speaker 1: is all about. What's the argument on the leave EU

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Speaker 1: side for how that would help? Well, Basically, if if Germany,

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Speaker 1: for example, of myths millions of Syrian refugees just to

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Speaker 1: take a case and they get working papers inside the EU,

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Speaker 1: then pretty soon they can travel to England and I'll

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Speaker 1: work here. So you know, there's more or less unlimited

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Speaker 1: capacity for for migration. And we've had migration into Britain

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Speaker 1: of two or three hundred thousand people per year net

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Speaker 1: of immigration for the last decade or so, and people

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Speaker 1: feel it's too much. Within that the big business big

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Speaker 1: corporate small business dichotomy. Not without informing with an opinion,

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Speaker 1: because I'm trying to stay out of the debate as

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Speaker 1: much as i can, Charles, how do the pro Brexit

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Speaker 1: smaller business people get the upper hand of the debate.

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Speaker 1: What's their action plan over the next number of weeks. Well,

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Speaker 1: I think the campaign on the Brexit side, the people

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Speaker 1: who want to leave UM is simply to emphasize that

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Speaker 1: that that is that the point I've just been making,

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Speaker 1: which is this UM compete sort of move towards European

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Speaker 1: unity which is going to happen on the continent on

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Speaker 1: current form is going to involve loss of control on

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Speaker 1: boorders and of course hasn't You've already involved for those guys,

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Speaker 1: loss of control of currency. And it's really a question

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Speaker 1: of how you think of yourself and what you think

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Speaker 1: you belong to. And so the argue that people will

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Speaker 1: be appealing to is that a country like for example, Germany,

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Speaker 1: which neither has a currency nor an enforcible border, it

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Speaker 1: looks more like a municipality than a country UM from

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Speaker 1: from a lot of standpoints, and yet they do have

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Speaker 1: a real coherence as a as a society and that's

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Speaker 1: that's what people in Britain field they have and it

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Speaker 1: will be playing on that that the basic campaign will

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Speaker 1: will succeed or fail. Charles Juma, thank you so much

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Speaker 1: at Lombard Street Research and Mike, Brexit is not going

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Speaker 1: to go away. Certainly the I m F thinks it's important. Yeah,

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Speaker 1: every I mean, if you have the President of the

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Speaker 1: United States weighing, you know, it's got to be worrying

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Speaker 1: people there. It is in part of the debate here

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Speaker 1: and of course Doha. When is DOA actually Sunday? Sunday,

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Speaker 1: So when we come in, are you here Monday? I'll

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Speaker 1: be here Monday. I'll be here Monday. Very good. Oil

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Speaker 1: Minister won't be here, but you and I will be here.

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Speaker 1: Futures negative five, down, futures negative six. We continue. We

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Speaker 1: hope you're with us for Bloomberg surveillance blowbarg surveillance brought

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Speaker 1: you by the Town of Hempstead Industrial Development Agency. Find

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Speaker 1: out how to put the Town of Hempstead I d

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Speaker 1: A to work for your business called one hundred five

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Speaker 1: nine three three A seven zero or visit t O

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Speaker 1: h I d A. Donald