1 00:00:03,160 --> 00:00:06,520 Speaker 1: This is Bloomberg Surveillance. You can't count on the United 2 00:00:06,559 --> 00:00:09,120 Speaker 1: States providing all the demand for the world. We can't 3 00:00:09,119 --> 00:00:12,040 Speaker 1: be the consumer first and last resort. There needs to 4 00:00:12,080 --> 00:00:14,280 Speaker 1: be more and I think the Fed got it right 5 00:00:14,400 --> 00:00:18,600 Speaker 1: last December when they said they would have four increases 6 00:00:18,720 --> 00:00:21,880 Speaker 1: this year. Investment really is the global issue that we're 7 00:00:21,920 --> 00:00:24,599 Speaker 1: facing a shortage of right now, and that's really holding 8 00:00:24,600 --> 00:00:28,240 Speaker 1: back the global economies. Bloomberg Surveillance your link to the 9 00:00:28,280 --> 00:00:34,160 Speaker 1: world of economics, finance, and investment on Bloomberg Radio. Good morning, 10 00:00:34,360 --> 00:00:36,800 Speaker 1: Michael mckenne. It is seven am on Wall Street. It's 11 00:00:36,800 --> 00:00:39,720 Speaker 1: APM in Shanghai, where Chinese officials are dealing with a 12 00:00:39,720 --> 00:00:43,080 Speaker 1: bit of a public relations oops. More than six percent 13 00:00:43,200 --> 00:00:45,920 Speaker 1: decline in Chinese shares the day before the G twenty 14 00:00:45,960 --> 00:00:51,600 Speaker 1: finance ministers and central bankers arrived to talk about state podcast. Embarrassing. 15 00:00:51,960 --> 00:00:55,480 Speaker 1: It is, uh. At least it's only embarrassing because it 16 00:00:55,520 --> 00:00:57,200 Speaker 1: wasn't a market killer for the rest of the world. 17 00:00:57,240 --> 00:00:59,960 Speaker 1: The rest of the world is stable this morning after 18 00:01:00,080 --> 00:01:04,640 Speaker 1: big turnaround in US markets yesterday. European forces are higher. 19 00:01:04,680 --> 00:01:07,040 Speaker 1: The stock six hundred up by six points now one 20 00:01:07,080 --> 00:01:09,960 Speaker 1: point eight percent. It's a two point three percent increase 21 00:01:10,120 --> 00:01:12,480 Speaker 1: for the foot see a hundred and thirty three points 22 00:01:12,959 --> 00:01:16,760 Speaker 1: Brexit worries calming down. Maybe the docks a hundred and 23 00:01:16,840 --> 00:01:19,640 Speaker 1: twenty eight points higher one point four percent. We should 24 00:01:19,680 --> 00:01:24,520 Speaker 1: mention better than forecast GDP for the UK in the 25 00:01:24,560 --> 00:01:28,360 Speaker 1: fourth quarter. That may be helping that stock market. As 26 00:01:28,400 --> 00:01:30,959 Speaker 1: I mentioned, Shanghai was down six point four percent, but 27 00:01:31,280 --> 00:01:33,640 Speaker 1: Tokyo up one point four percent. So go figure the 28 00:01:33,680 --> 00:01:35,679 Speaker 1: bond market about where it was when we started this 29 00:01:35,680 --> 00:01:38,880 Speaker 1: show yesterday. The ten year note yield at one point 30 00:01:39,080 --> 00:01:42,560 Speaker 1: seven four percent, the five year one point two and 31 00:01:42,760 --> 00:01:45,840 Speaker 1: seventy five basis points for year two year. Not a 32 00:01:45,880 --> 00:01:49,000 Speaker 1: lot of movement, and currencies either. Right now. The dollar 33 00:01:49,120 --> 00:01:53,960 Speaker 1: index is down five basis points basically UH, little change, 34 00:01:54,000 --> 00:01:56,640 Speaker 1: the en one forty, about where it was yesterday. The 35 00:01:56,720 --> 00:02:00,240 Speaker 1: euro touched stronger one thirty, and the power on the 36 00:02:00,280 --> 00:02:02,840 Speaker 1: back of that better g d P report is higher 37 00:02:02,960 --> 00:02:06,760 Speaker 1: still below one sixty three, but it is up by 38 00:02:06,840 --> 00:02:09,519 Speaker 1: three tenths of a percent this morning. UH. And oil 39 00:02:09,520 --> 00:02:12,160 Speaker 1: prices little changed on the day. Thirty two h six 40 00:02:12,320 --> 00:02:16,120 Speaker 1: West Texas thirty four nineteen Brent big surplus yesterday, but 41 00:02:16,360 --> 00:02:20,480 Speaker 1: oil seems to have stabilized. So is this good news? 42 00:02:20,960 --> 00:02:24,720 Speaker 1: Is it the calm before the storm? Well, that's the 43 00:02:24,800 --> 00:02:28,920 Speaker 1: view of Saxo Banks, Stein Jacobson. Yesterday, Tom Treasury Secretary, 44 00:02:28,919 --> 00:02:31,919 Speaker 1: and Jack williall remember told us there is no global crisis. 45 00:02:32,040 --> 00:02:37,360 Speaker 1: But Saxo some disagree. Yeah, Saxo's chief economist. No, you say, Stein, 46 00:02:37,680 --> 00:02:44,800 Speaker 1: just wait. March maybe ugly. Absolutely, I think the steam 47 00:02:44,919 --> 00:02:47,480 Speaker 1: and the fact that a center banger or five minutes 48 00:02:47,520 --> 00:02:50,880 Speaker 1: Finance minister is actually indicating that nothing is going on 49 00:02:51,200 --> 00:02:54,519 Speaker 1: is probably my biggest concern. If you look at the 50 00:02:54,600 --> 00:02:56,239 Speaker 1: p m I in the U S. If you look 51 00:02:56,240 --> 00:02:59,120 Speaker 1: at China down six again this morning on high i'm 52 00:02:59,120 --> 00:03:02,680 Speaker 1: money market rate. If you look at Japan inter negative 53 00:03:02,720 --> 00:03:06,200 Speaker 1: indust rate, the Japanese banking index is down twenty five 54 00:03:06,680 --> 00:03:09,680 Speaker 1: since they're moving into negative indust rate, and for five 55 00:03:09,720 --> 00:03:13,560 Speaker 1: percent since the peak of the euphoria after the economics 56 00:03:13,680 --> 00:03:17,079 Speaker 1: was introduced. I think there is a pattern here that 57 00:03:17,120 --> 00:03:19,960 Speaker 1: March could be pretty nasty. We all have expectations that 58 00:03:20,080 --> 00:03:24,200 Speaker 1: view j has another bazooga, and we also expect drug 59 00:03:24,200 --> 00:03:27,480 Speaker 1: It to be coming in with full force trying to 60 00:03:27,639 --> 00:03:30,880 Speaker 1: talk to the market again. The problem is, I think 61 00:03:30,960 --> 00:03:34,400 Speaker 1: the Japanese experience with negative industrate is already indicating what 62 00:03:34,440 --> 00:03:37,200 Speaker 1: will happen to the European banking sector, and that is 63 00:03:37,280 --> 00:03:39,640 Speaker 1: that it will be a huge tax on the bank's 64 00:03:39,640 --> 00:03:43,360 Speaker 1: earnings power, first because they have to protect the depositors 65 00:03:43,440 --> 00:03:45,840 Speaker 1: from negative indust rate, as we've seen my country denmog 66 00:03:45,880 --> 00:03:49,040 Speaker 1: right now. And suddenly, of course, because the curve goes 67 00:03:49,240 --> 00:03:51,880 Speaker 1: instead of steepening, it actually goes flat to two inverse, 68 00:03:52,400 --> 00:03:54,000 Speaker 1: which is the worst. And now you can have on 69 00:03:54,040 --> 00:03:56,600 Speaker 1: top of that. Of course, it reflects an economy where 70 00:03:56,680 --> 00:03:59,880 Speaker 1: the growth rate at the top line level is from 71 00:04:00,000 --> 00:04:02,600 Speaker 1: a very sluggish So you know, a lot of concerns, 72 00:04:02,880 --> 00:04:06,560 Speaker 1: but you know, I don't have the prediction. Unfortunate that 73 00:04:06,840 --> 00:04:09,400 Speaker 1: I don't know what will happen. But I'm very concerned 74 00:04:09,400 --> 00:04:11,240 Speaker 1: for March also because I think a lot of things 75 00:04:11,280 --> 00:04:14,040 Speaker 1: are lining up and a lot of hope is placed 76 00:04:14,040 --> 00:04:16,920 Speaker 1: on it on the center vengus and finest ministers, and 77 00:04:17,960 --> 00:04:20,600 Speaker 1: they tend to disappoint. Are they going to be reacting 78 00:04:20,600 --> 00:04:21,960 Speaker 1: to what's going on or are they going to be 79 00:04:22,000 --> 00:04:24,919 Speaker 1: the cause of what's going on? They will always be 80 00:04:24,960 --> 00:04:27,479 Speaker 1: the course when you look in the in the life 81 00:04:27,480 --> 00:04:30,080 Speaker 1: of history, they are always the core stuffing. You know, 82 00:04:30,160 --> 00:04:32,159 Speaker 1: think about back to the time before Bank of England 83 00:04:32,160 --> 00:04:34,560 Speaker 1: as a first center bangas introduced, we rarely had any 84 00:04:34,560 --> 00:04:36,960 Speaker 1: financial crisis. Is ever since the Bank of England has 85 00:04:36,960 --> 00:04:40,000 Speaker 1: been introduced in sixteen ninety four, every twenty five years 86 00:04:40,000 --> 00:04:41,520 Speaker 1: we had a made a crisis. So I think that 87 00:04:41,640 --> 00:04:44,840 Speaker 1: is your academic response. No, you bring a lot of 88 00:04:44,880 --> 00:04:47,800 Speaker 1: that history to your research. Good morning everyone. Bloomberg Surveillance 89 00:04:48,360 --> 00:04:51,159 Speaker 1: brought you buy Investco. Investco believes it's trying to bench 90 00:04:51,200 --> 00:04:56,680 Speaker 1: the benchmarks to consider active management and factor based strategies. 91 00:04:56,720 --> 00:05:00,720 Speaker 1: Find out more and investco dot com slash high conviction. 92 00:05:00,760 --> 00:05:05,000 Speaker 1: I m v s CEO in Busco dot com slash 93 00:05:05,400 --> 00:05:08,440 Speaker 1: high conviction. We thank them for their support. We are 94 00:05:08,480 --> 00:05:10,960 Speaker 1: thrilled to bring you Stein Jacobson, he writes Razors Sharp 95 00:05:11,040 --> 00:05:16,039 Speaker 1: Notes Opinionated Notes out of Saxel Bank in Copenhagenstein, you 96 00:05:16,120 --> 00:05:19,080 Speaker 1: talk about two canaries in the coal mine. It's a 97 00:05:19,120 --> 00:05:23,240 Speaker 1: worn out cliche, but you're brilliant on the linkage is 98 00:05:23,360 --> 00:05:26,920 Speaker 1: of the two canaries chirping. What are the canaries and 99 00:05:26,960 --> 00:05:30,720 Speaker 1: why are they chirping together? Yeah? So the first one, 100 00:05:30,760 --> 00:05:33,159 Speaker 1: of course is the easy one, which is the the 101 00:05:33,240 --> 00:05:36,839 Speaker 1: Sterling and the Brexit and the whole conversation about the Sterling, 102 00:05:36,880 --> 00:05:39,360 Speaker 1: whether they're going to be opting in, the hopping out. 103 00:05:39,520 --> 00:05:42,000 Speaker 1: But I think the bigger background to that, of course, 104 00:05:42,120 --> 00:05:44,360 Speaker 1: is the fact that the fact of Europe is now 105 00:05:44,400 --> 00:05:48,120 Speaker 1: in two tiers. UH UK got a deal this past 106 00:05:48,240 --> 00:05:52,160 Speaker 1: weekend which is and constitutes clear violation of the principle 107 00:05:52,279 --> 00:05:55,359 Speaker 1: of the U. So whatever happens with the UK, I 108 00:05:55,400 --> 00:05:58,200 Speaker 1: think the biggest implication here is actually is negative for 109 00:05:58,279 --> 00:06:01,839 Speaker 1: your But Sterling is back to levels which is and 110 00:06:01,920 --> 00:06:05,000 Speaker 1: has only been seen during the pig financial crisis in 111 00:06:05,040 --> 00:06:07,320 Speaker 1: two thousand and five, two thousand and eight, one thirty 112 00:06:07,360 --> 00:06:10,520 Speaker 1: five being the next level probably, So that is the 113 00:06:10,680 --> 00:06:14,839 Speaker 1: European sort of uh whistle that that has been blown. 114 00:06:14,880 --> 00:06:18,640 Speaker 1: And of course the go to currency in terms of 115 00:06:18,839 --> 00:06:21,960 Speaker 1: light is always begin and has historically always been the yin. 116 00:06:22,480 --> 00:06:25,120 Speaker 1: And actually we've been long enough, like you Tom in 117 00:06:25,160 --> 00:06:28,080 Speaker 1: the market to know that when things start to to 118 00:06:28,320 --> 00:06:31,279 Speaker 1: get worse and the outlook version in terms of the 119 00:06:31,480 --> 00:06:33,960 Speaker 1: re scenario is always then we go to and we 120 00:06:34,000 --> 00:06:36,159 Speaker 1: are you know, we've taken out all of the game 121 00:06:36,240 --> 00:06:39,000 Speaker 1: since economics in the talar un rate, and on top 122 00:06:39,040 --> 00:06:41,719 Speaker 1: of that as I just mentioned, depending index and the 123 00:06:41,800 --> 00:06:46,320 Speaker 1: topics index in Japan is under severe pressure. Basically all 124 00:06:46,360 --> 00:06:49,039 Speaker 1: of economics has been lost in the space of two months. 125 00:06:49,120 --> 00:06:51,720 Speaker 1: On top of that we the huge amount of repatriation 126 00:06:51,760 --> 00:06:54,680 Speaker 1: in Again, of course today beginn is up one big figure. 127 00:06:54,760 --> 00:06:57,760 Speaker 1: So it's sort of the counter moving to that. But 128 00:06:57,839 --> 00:07:00,760 Speaker 1: I think the yin is you're leading indicate and think 129 00:07:00,760 --> 00:07:03,360 Speaker 1: back to seven. Think that to most of the financial 130 00:07:03,400 --> 00:07:06,599 Speaker 1: crisis in the in Asian collection crisis, very often the 131 00:07:06,680 --> 00:07:09,960 Speaker 1: impulse to the marketplace confirm Asia, and in my opinion, 132 00:07:10,080 --> 00:07:13,680 Speaker 1: the Japanese story, the Yan story, is the one leading 133 00:07:13,720 --> 00:07:16,560 Speaker 1: story to all all the interiors right now, did you note, 134 00:07:16,600 --> 00:07:20,280 Speaker 1: Michael McKee how Mr Jacobson partitioned him and me as 135 00:07:20,360 --> 00:07:24,720 Speaker 1: fossils and did not mention you because of your Peyton 136 00:07:24,800 --> 00:07:30,080 Speaker 1: Manning is ute? Well, I appreciate Dad Stein. You know 137 00:07:31,280 --> 00:07:36,240 Speaker 1: Tom is experienced. Just keep it, keep it going, folks, 138 00:07:36,320 --> 00:07:41,520 Speaker 1: keep it going. Uh. Back in Japan, they're, as you say, 139 00:07:41,600 --> 00:07:46,080 Speaker 1: they're expected to take additional action given the loss of 140 00:07:46,440 --> 00:07:50,400 Speaker 1: progress over the last couple of weeks. Uh Are they 141 00:07:50,600 --> 00:07:53,840 Speaker 1: doing the wrong thing? Now? Would they be better off 142 00:07:54,560 --> 00:07:57,640 Speaker 1: getting out of the business of trying to manage the economy, 143 00:07:58,040 --> 00:08:01,080 Speaker 1: leaving it to the fiscal authorities are letting the Japanese 144 00:08:01,080 --> 00:08:05,520 Speaker 1: markets clear however, they might do that absolutely, but as 145 00:08:05,600 --> 00:08:09,120 Speaker 1: you've been directly through, the Christian is also saying it's impossible. 146 00:08:09,840 --> 00:08:13,040 Speaker 1: Just this morning, the b of j Governor Corona was 147 00:08:13,080 --> 00:08:14,880 Speaker 1: in front of the Parliament. He took a lot of 148 00:08:14,920 --> 00:08:18,640 Speaker 1: snakes from the parliamentarians. Even within the Bank of Japan 149 00:08:18,720 --> 00:08:22,200 Speaker 1: there is a huge diversion on whether negative injuries works. 150 00:08:22,280 --> 00:08:25,120 Speaker 1: It's a very vocal part of the BUJ saying this 151 00:08:25,200 --> 00:08:28,800 Speaker 1: is actually adding to the commotion, no returned, not reducing risk. 152 00:08:29,240 --> 00:08:32,320 Speaker 1: But I think you know, in the perfect world and 153 00:08:32,320 --> 00:08:35,960 Speaker 1: and unfortunately the world with bankers and politician is not 154 00:08:36,000 --> 00:08:38,080 Speaker 1: a perfect world. But that that then that will all 155 00:08:38,120 --> 00:08:40,920 Speaker 1: step aside and just leave it to the long term 156 00:08:41,160 --> 00:08:43,240 Speaker 1: things that we work for an economy, which of course 157 00:08:43,400 --> 00:08:47,200 Speaker 1: is productivity, infrastructure investment, and a focus on the hill 158 00:08:47,280 --> 00:08:50,360 Speaker 1: incentive structure of heart white people and how they are 159 00:08:50,360 --> 00:08:55,480 Speaker 1: okay capital. How do you respond to the optimus saying 160 00:08:55,520 --> 00:08:59,960 Speaker 1: we will find productivity, we will find technical logical progress 161 00:09:00,040 --> 00:09:03,520 Speaker 1: even in Europe, will at least get the stability in stasis. 162 00:09:03,559 --> 00:09:08,280 Speaker 1: How do you push back against that inherent optimism. I 163 00:09:08,360 --> 00:09:11,040 Speaker 1: don't know them because it's right over the long term, 164 00:09:11,120 --> 00:09:13,800 Speaker 1: but recyclically, we are in a sound period in terms 165 00:09:13,800 --> 00:09:16,120 Speaker 1: of productivity, and I have the luxury of guarantee about 166 00:09:16,120 --> 00:09:18,120 Speaker 1: thirty five countries on an average. Here, I need a 167 00:09:18,160 --> 00:09:23,560 Speaker 1: thousand upon thousand of smart, aggressive, innovative people who in 168 00:09:23,600 --> 00:09:25,599 Speaker 1: the micro economy, as I like to call it, is 169 00:09:25,640 --> 00:09:28,000 Speaker 1: trying to do better, to do you know, with a 170 00:09:28,080 --> 00:09:31,199 Speaker 1: higher profit and productivity. But the fact of the matter is, 171 00:09:31,280 --> 00:09:34,079 Speaker 1: and the way we mentioned productivity, we are on a 172 00:09:34,120 --> 00:09:37,120 Speaker 1: negative downward spiral. I mean, it seems like people think 173 00:09:37,200 --> 00:09:40,800 Speaker 1: that getting more acts on your Apple phone is actually productivity, 174 00:09:41,200 --> 00:09:44,000 Speaker 1: which of course is not in economic terms. But but 175 00:09:44,000 --> 00:09:46,760 Speaker 1: but the pushback is that, yes, that could be at 176 00:09:46,760 --> 00:09:48,920 Speaker 1: the end of the rainbow, some sort of improvement that 177 00:09:49,080 --> 00:09:52,839 Speaker 1: but that will be quantum computing on something of that magnitude. 178 00:09:52,840 --> 00:09:55,679 Speaker 1: The fact is that technology was productivity has been on 179 00:09:55,960 --> 00:09:58,240 Speaker 1: the downtrend for a very long time, and a lot 180 00:09:58,240 --> 00:09:59,840 Speaker 1: of that has to do with the way we do 181 00:10:00,000 --> 00:10:03,559 Speaker 1: this is today think about the concept like digitization, digital 182 00:10:03,679 --> 00:10:06,400 Speaker 1: station worse in order to save money. But if that 183 00:10:06,559 --> 00:10:10,440 Speaker 1: saved money is not reinvested into new and better quality product. 184 00:10:10,520 --> 00:10:12,960 Speaker 1: Where we end up with is a business model where 185 00:10:12,960 --> 00:10:15,600 Speaker 1: the product get worse and the experience of buying the 186 00:10:15,640 --> 00:10:20,840 Speaker 1: product gets you know, indifferent from each other. Let's come back. 187 00:10:21,440 --> 00:10:24,480 Speaker 1: Jean Jacobson is the chief economist at Saxo Bank, and 188 00:10:24,760 --> 00:10:26,719 Speaker 1: uh he has a different view, shall we say, than 189 00:10:26,760 --> 00:10:29,680 Speaker 1: the Secretary of the Treasury. Well, yeah, but he's also 190 00:10:29,720 --> 00:10:31,959 Speaker 1: not a public official. This is great. We're gonna get 191 00:10:32,000 --> 00:10:36,440 Speaker 1: huge response from our comments from Copenhagen this morning. Futures 192 00:10:36,440 --> 00:10:39,600 Speaker 1: of five down, futures of forty three? Is Mike mentioned? 193 00:10:39,640 --> 00:10:42,400 Speaker 1: All in all, the constructive tape oil with a nice 194 00:10:42,480 --> 00:10:48,440 Speaker 1: bid thirty two zero eight on West Texas Intermediate this morning. 195 00:10:52,559 --> 00:10:54,840 Speaker 1: This hour of surveillance is brought to you by Westchester 196 00:10:54,880 --> 00:10:58,080 Speaker 1: subar Up. Visit Westchester subarut dot com. Here's John Tucker 197 00:10:58,120 --> 00:11:01,120 Speaker 1: with news headline, Houston will to the side of tonight's 198 00:11:01,160 --> 00:11:04,959 Speaker 1: Republican presidential debate with Donald Trump rivals. They'll get one 199 00:11:04,960 --> 00:11:07,440 Speaker 1: more chance to try and de rail the Republican front 200 00:11:07,480 --> 00:11:10,200 Speaker 1: runner before Super Tuesday. The White House said to be 201 00:11:10,200 --> 00:11:14,280 Speaker 1: considering Republican Governor Brian Sandelville of Nevada as a possible 202 00:11:14,360 --> 00:11:19,520 Speaker 1: nominee to the Supreme Court and Washington State new variety 203 00:11:19,520 --> 00:11:22,600 Speaker 1: of Apple about to make its debut. Scientists at Washington 204 00:11:22,679 --> 00:11:26,719 Speaker 1: State University have come up with Cosmic Crisp, which has 205 00:11:26,760 --> 00:11:30,280 Speaker 1: been developed over the last twenty years. Global News twenty 206 00:11:30,760 --> 00:11:34,559 Speaker 1: a day, powered by a journalists in more than one 207 00:11:34,600 --> 00:11:38,160 Speaker 1: news bureaus around the world. John Tucker, Cosmic christ is 208 00:11:38,200 --> 00:11:43,599 Speaker 1: the Cosmic Crisp is the eighteen year old socks, a 209 00:11:43,679 --> 00:11:49,160 Speaker 1: breakfast cereal that's going to have alcohol. 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