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Speaker 1: Broadcasting Live to New York, Bomberg eleventh Rio to Washington,

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Speaker 1: d C, Bloomberg to Boston, Bloomberg Dwell unders to San Francisco,

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Speaker 1: around the globe the Bloomberg Radio Plus Appen Bloomberg dot Com.

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Speaker 1: This is Bloomberg Surveillance. Good morning. It is Say thirty

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Speaker 1: on Wall Street Him Michael McKee along with Tom Keen.

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Speaker 1: Our economic indicators are brought to you by Commonwealth Financial Network.

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Speaker 1: When it's time to change the conversation, talk with the

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Speaker 1: broker dealer r I A that's ready to listen call

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Speaker 1: Commonwealth dot com to learn more. Here's Vinnie deal Judas

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Speaker 1: with the UH Import Price Index, Yes, Michael. The first

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Speaker 1: of three government inflation reports this week. The Labor Department

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Speaker 1: says the import price index rose point two percent in March.

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Speaker 1: That's the first increase since June. The increase less than forecast.

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Speaker 1: What upen? Fuel costs up, food costs down again a

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Speaker 1: point two percent month over month increase. You over year

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Speaker 1: down though, down six point two percent, illustrating the conundrum

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Speaker 1: faced by the Federal Reserve regarding inflation earlier n F

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Speaker 1: I be small Business Optimism Index A fellon March to

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Speaker 1: two point six at the Blue Bark first work as

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Speaker 1: company del GEDI let's go back to New York. Of

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Speaker 1: anything so much, Mike. Um, I'm taken back by something

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Speaker 1: I normally don't look at, which is import prices. That's

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Speaker 1: something I mean, there's there the revisions. That's just something

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Speaker 1: that's just the stuff is cheaper. Well, do I understand

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Speaker 1: oils in there? Yeah? I mean oil is a major

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Speaker 1: driver of that. But of course the big question in

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Speaker 1: this month numbers seems to be food. Uh, food prices falling,

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Speaker 1: you know, and then you ask, is that a bad thing?

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Speaker 1: I mean it's a bad thing maybe for producers. Um.

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Speaker 1: Looking at a an interesting table here, March airfares to

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Speaker 1: the US fell six point three from a year ago. Uh.

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Speaker 1: Import passenger fairs down, um, and export passenger fairs up.

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Speaker 1: So costume more to leave the country. That maybe a

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Speaker 1: function of the stronger dollar. I mean, we could have

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Speaker 1: one way tickets for children. Don't you wish? Save us

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Speaker 1: unreal estate? Well, let's let's let's let's talk about the

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Speaker 1: the economy and talk about housings role in that with

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Speaker 1: Doug Duncan, he is uh senior vice president, Chief Economists,

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Speaker 1: Dad Fanny May Uh, Doug, we're all watching for signs

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Speaker 1: of inflation. I mean you live with it in housing

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Speaker 1: because prices generally go up, but in general, Uh, inflation, Well, well,

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Speaker 1: how would you characterize it? Is it starting to come?

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Speaker 1: Or is have we gotten a head fake? I moved

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Speaker 1: up a little bit, and the owners of owners equivalent

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Speaker 1: rent was a conturbator to that. Part of that is

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Speaker 1: a function that there's no supply at the low price plant,

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Speaker 1: either in owned properties or rented properties. So I would

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Speaker 1: expect to see some continued pressure on that component of

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Speaker 1: the inflation index. The addition of all these jobs is

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Speaker 1: pushing the demand curve, and it's moving faster than supply.

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Speaker 1: Owners equivalent rent, of course, is away. The Commerce Department

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Speaker 1: Labor department rather calculates home prices in the CPI what

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Speaker 1: it would cost to rent your house. Um, what is

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Speaker 1: the trend with house prices? Uh, They're still moving on strongly. Uh.

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Speaker 1: We anticipate about another five percent, are a little more

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Speaker 1: than five percent nomenal this year there will be the

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Speaker 1: fourth consecutive year in which they've risen around that much,

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Speaker 1: and that's a lot faster than real household incomes are increasing.

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Speaker 1: That we are a team that's year for for the

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Speaker 1: market and housing is housing affordability constraints as the expansion

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Speaker 1: matures are trying point. This is now the fourth longest

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Speaker 1: expansion since Weller two. If you look at our survey consumers,

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Speaker 1: they don't feel that the share of thinking that the

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Speaker 1: economy is going wrong tracks actually increasing. But both rents,

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Speaker 1: particularly in the lower quality apartments see grain apartments uh,

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Speaker 1: and prices of the lower price homes are appreciating faster

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Speaker 1: than our higher prices are higher rents. Hey, you look,

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Speaker 1: dug where we are at the top line of every

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Speaker 1: discussion our unit dynamic dynamics and east dynamics. I believe

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Speaker 1: you heard. I heard you say. The price dynamics are

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Speaker 1: overwhelmed by the oddity of no supply explained explained to

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Speaker 1: me in the quote unquote of a normal spring season.

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Speaker 1: What you anticipate will be the mood as people go

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Speaker 1: out and look for houses. I can't get a handle

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Speaker 1: of it. Yeah, it is. It is interesting. Our our

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Speaker 1: release on our home purchase sentiment index has flattened and

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Speaker 1: actually come down a little bit in the first quarter.

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Speaker 1: Our interpretation that is that people have looked at the

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Speaker 1: last two quarters of growth, which in real terms have

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Speaker 1: averaged one and a quarter percent annualized. Uh. They're kind

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Speaker 1: of looking at that and saying, I don't really like

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Speaker 1: the direction that's taking. So our our index of home

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Speaker 1: purchase sentiment, which is a kind of a twelve month

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Speaker 1: forward look, have actually flattened out. Um, that's Charlie consists.

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Speaker 1: Whether our forecasts were thinking about three increase this year

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Speaker 1: in total sales, whereas last year total sales are up

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Speaker 1: about seven. Well, let's come back with Dug Duncan. He's

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Speaker 1: the chief economist at Fanny May. Um, what are we

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Speaker 1: gonna do to get more houses on the market. I

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Speaker 1: guess raise prices, right, I think that's part of it.

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Speaker 1: But I look at it with the phrase that I

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Speaker 1: mentioned earlier. I believe it was with Jeff Curry. Every

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Speaker 1: asset class, including housing, which is basically tangible asset, difficult

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Speaker 1: to move compared to markets. Everybody has a great distortion,

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Speaker 1: and there's a great distortion to Doug Duncan's world. We'll

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Speaker 1: come back and talk to him about the distortive features

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Speaker 1: that are out there. I do want to talk to

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Speaker 1: him about UM the lender of of of only resort,

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Speaker 1: Fannie and Freddie as well. Futures up seven earlier, up

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Speaker 1: six right now. A turn to the market, but with

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Speaker 1: a constructive feel to it, without question. The headline two

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Speaker 1: hours ago strong euro uh It's come back fourteen one

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Speaker 1: zero two on euro the yen one O eight twenty

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Speaker 1: nine oil forty dollars seventy five cents the barrel. This

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Speaker 1: hour of surveillance brought you by Monk Kisco Volvo. Visit

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Speaker 1: mont Kisco Volvo dot com. Here's like a bar Mike Tom,

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Speaker 1: thank you very much. The chairman of the Senate Judiciary

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Speaker 1: Committee is having breakfast with the President Obama's Supreme Court nominee.

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Speaker 1: Chairman Chuck Grassley says he's meeting with Americ Garland to

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Speaker 1: explain to him why the Senate will take up his nomination.

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Speaker 1: Republicans have refused to vote on President Obama's nominee, saying

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Speaker 1: the next president should have a same higher speed limits

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Speaker 1: means increased depths. That's according to a study by the

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Speaker 1: Insurance Institute for Highway Safety i h S. Spokesman rest

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Speaker 1: Rats says each five mile per hour increase in the

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Speaker 1: speed limit results in a four percent increase in fatalities.

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Speaker 1: People will drive at the speed at which they feel

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Speaker 1: comfortable that they won't get a ticket, and that's usually

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Speaker 1: five or ten miles an hour over the speed limit.

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Speaker 1: So when you raise the speed limit, you just shift

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Speaker 1: those high speed drivers into an even higher bracket. The

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Speaker 1: Insurance Institute for Highway Safety is out with another survey,

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Speaker 1: and it's good news for Ford. F one fifty is

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Speaker 1: the only full size pickup truck to score the top

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Speaker 1: rating in new front crash tests. Global News twenty four

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Speaker 1: hours a day, powered by our two hundred journalists and

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Speaker 1: more than a hundred fifty news buras around the world.

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Speaker 1: Michael Bark, Mike Tom, Thank you, Michael. Time now for

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Speaker 1: the Bloomberg NBC Sports Update with John Stasha. Thanks Mike,

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Speaker 1: Stephen Matts had to wait a while get his first

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Speaker 1: start of the season, and then it was over. Before

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Speaker 1: the second inning ended, Marlin scored seven times, beat the

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Speaker 1: Mets ten to three, leaving matss e r a near

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Speaker 1: thirty eight and leaving the Mets with three straight home

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Speaker 1: losses by a combined sixteen to five couple of Becks Mets,

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Speaker 1: John Niece's first win from Pittsburgh seven four at Detroit

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Speaker 1: and Daniel Murphy to run homer in Washington six four

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Speaker 1: win over Atlanta. Murphy's back in four seventy one with

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Speaker 1: seven r bids comes in their home opener. Didn't get

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Speaker 1: a hit until the seventh in Ain't still beat Cincinnati

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Speaker 1: five three on Addison Russell's three one shot in the eighth.

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Speaker 1: The Orioles are six and oh Chris Davis three run

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Speaker 1: homer ninth inning, the spoiler of the Red Sox home

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Speaker 1: opener nine to seven. The net sixty loss to Washington

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Speaker 1: on eleven, Wizards were in front twenty to nothing and

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Speaker 1: then actually fell behind before prevailing. Oklahoma City beat the

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Speaker 1: Lakers by thirty three, Russell Westbrook triple double by halftime.

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Speaker 1: Kobe Bryant's last game is tomorrow night. Dallas won the

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Speaker 1: Clinton's playoffs spot. Cleveland won to clinch the one seed

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Speaker 1: in the East Stanley Cup playoffs beginning tomorrow night. For

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Speaker 1: the Rangers, they'll be without captain Ryan mcdonnah at least

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Speaker 1: for the opener at Pittsburgh due to his hand injury.

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Speaker 1: NFL drafted a little over two weeks. Could the Jets

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Speaker 1: take a quarterback. They're bringing cows Jared Goffin for a

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Speaker 1: visit this week. The Jets picked twenty may need to

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Speaker 1: trade up if they want to get Bob. NBC Sports Update.

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Speaker 1: I'm John jon Thanks so much wellster Journal today with

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Speaker 1: a terrific article about something might I've seen I think

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Speaker 1: no less than three articles in the last six weeks

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Speaker 1: on this new thing in a hockey and for those

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Speaker 1: with the global audience, we will explain. It used to

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Speaker 1: be when the puck was shot at the goal, you

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Speaker 1: got out of the way and let the goalie make

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Speaker 1: the safe. Now these guys, allah, Ryan McDonough the New

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Speaker 1: York Rangers are trying to block everything in sight. There's

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Speaker 1: a price to that. Yes, you you risk life and

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Speaker 1: limb or facing limb as it were, um or ankle

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Speaker 1: or me or ankle. Interesting article in the Washington Post

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Speaker 1: this morning is sort of breaks down every team's weakness

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Speaker 1: in the playoffs, and a lot of it centers around

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Speaker 1: those who are missing going into the playoffs because they

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Speaker 1: have injured themselves. From New York, Bloomberg Surveillance Bank Bloemberg

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Speaker 1: mobile app and on your radio. This is a Bloomberg

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Speaker 1: Business Flash. And I'm Karen Moscow. And this update is

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

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Speaker 1: rented real estate find them at n r i A

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Speaker 1: dot net. Stocks are rising with commodities where the end

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Speaker 1: slips and government bonds fall, as crude oil's advance about

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Speaker 1: forty dollars a barrel boost economic optimism, which checked the

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Speaker 1: markets every fifteen minutes throughout the trading day. On Bloomberg

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Speaker 1: SNP eveny Future is up six points down Even the

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Speaker 1: Future is up forty one and as doc eveny futures

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Speaker 1: up thirteen. The decks in Germany's up four tenths per

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Speaker 1: set ten. Your treasury down eight thirty seconds. The yield

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Speaker 1: one point seven five percent yelled on the two year

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Speaker 1: point seven one percent no I'm x screwed oil up

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Speaker 1: one point one percent, or forty four cents to forty

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Speaker 1: dollars seventy nine cents of barrel. Comex's gold is a

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Speaker 1: four tenths per center five dollars forty cents at twelve

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Speaker 1: sixty three twenty announced the euro a dollar thirteen ninety nine.

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Speaker 1: The EN one oh eight point to five. US small

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Speaker 1: business optimism declining in March, according to the National Federation

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Speaker 1: of Independent Business. The organization's monthly Small Business Optimism Index

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Speaker 1: felt the ninety two point six last month, compared to

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Speaker 1: a nainety two point nine in February. Import prices in

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Speaker 1: the US increased in March for the first time since

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Speaker 1: June twenty fifteen, adding two tenths per cent compared to

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Speaker 1: the month before. Economists were looking for an increase of

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Speaker 1: one percent. And that's a Bloomberg Business flash, Tom and

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Speaker 1: Mike Karen, thanks so much again. The EN It is

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Speaker 1: at eight on Wall Street. The following is from Bloomberg

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Speaker 1: View Opinions in commentary from Bloomberg columnists. I'm Justin Fox,

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Speaker 1: a columnist for Bloomberg View. Non Competes are agreements that

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Speaker 1: keep employees from going to work for a competitor for

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Speaker 1: a predetermined period of time. Proponents have long defended them

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Speaker 1: is a way to encourage employers to invest in workers skills.

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Speaker 1: Critics have depicted them as unfair restraint of trade. In

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Speaker 1: the eighteen seventies, without really meaning to, California lawmakers made

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Speaker 1: it impossible for employers to enforce non competes in the state.

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Speaker 1: About a century later, something interesting happened. A region of

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Speaker 1: California became the global headquarters of the tech industry, with

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Speaker 1: a unique business culture that tolerated job hopping and celebrated startups.

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Speaker 1: This wasn't a coincidence. California's ban on the enforcement of

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Speaker 1: non competes helped make Silicon Valley what it is today.

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Speaker 1: Recent research has shown that non competes reduce entrepreneurship and

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Speaker 1: cause brain drain from regions that enforced them. There's even

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Speaker 1: some evidence that non competes reduce worker motivation. Yet the

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Speaker 1: use of non competes appears to be growing, even for

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Speaker 1: fast food workers in summer camp counselors. This is ridiculous.

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Speaker 1: More states should consider following California's lead. I'm Justin Fox,

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Speaker 1: a columnist for Bloomberg view for more Bloomberg opinion and commentary,

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Speaker 1: Please go to Bloomberg View dot com or view go

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Speaker 1: on the Bloomberg terminal. This has been Bloomberg View and

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Speaker 1: bloomber View commentaries can be here to hourly weekdays on

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Speaker 1: Bloomberg Radio. We're throw to bring a Douglas Duncan darkened

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Speaker 1: the store of College Station, Texas a few years ago.

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Speaker 1: Uh to take his pH d. Dug Duncan is with

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Speaker 1: Fannie May. Doug what is the appropriate amount every month

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Speaker 1: that we should put into rent or housing? This is

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Speaker 1: the hottest and most sensitive of topics in Paris, London,

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Speaker 1: New York, Washington, San Francisco. It's out of control. How

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Speaker 1: much a month should we put in Yeah, I take

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Speaker 1: a long term rule of some and somewhere around a

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Speaker 1: third something in that Paul Park and you're certainly seeing

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Speaker 1: well above that in some markets now the ones that

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Speaker 1: you mentioned. I was just out in Santos and there's

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Speaker 1: essentially no affordable homes single family detached homes available for sale,

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Speaker 1: and uh anything close to the core business the district

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Speaker 1: or near in rents. They're uh certainly pushing above that

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Speaker 1: number that I decided. What is the social cost of

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Speaker 1: that if any is it a good thing, is it

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Speaker 1: a bad thing? Is it handeringing by how do you

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Speaker 1: by liberals, how do you equate in the reality that

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Speaker 1: we're putting in thirties three or forty two or of

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Speaker 1: our income or just to survive every month? Yeah, it

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Speaker 1: hass two or three impacts. One is certainly reduces the

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Speaker 1: ability and household to save. And you know, one of

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Speaker 1: the things that was a huge contributor to the crisis

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Speaker 1: was success leverage at both the household and business levels.

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Speaker 1: So to the extent your housing costs is a contributor

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Speaker 1: to excess leverage, and also that's a negative um A.

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Speaker 1: The second thing is that for the business community, at

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Speaker 1: some point you won't be able to afford to pay

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Speaker 1: a wage rate that will allow the the worker to

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Speaker 1: live in close enough proximity to make it make sense

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Speaker 1: to work for their company. So you'll start to see

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Speaker 1: some business migration at some point. You saw that in

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Speaker 1: the mid eighties in California it was a large outmigration

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Speaker 1: of small business there Holding and Utah, Oregon. So it

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Speaker 1: will lead to some relocation issues on the part of

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Speaker 1: it takes some time for the cost structure to get

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Speaker 1: to that point, uh and and um, but before you

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Speaker 1: see that move and that's not good for a well growth. Um.

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Speaker 1: The question that comes to mind is, in most cases

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Speaker 1: you have a situation like that, the market is going

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Speaker 1: to find a way to clear. Uh. Somebody would come

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Speaker 1: in and build housing for the workers that can't afford

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Speaker 1: to live anywhere else. But you've got the addation in

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Speaker 1: real estate and they get zoned out. They don't want

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Speaker 1: lower priced houses anywhere near the expensive ones. Yeah, it's true.

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Speaker 1: I mean I'm saying story Saturday and talking to a

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Speaker 1: builder about a year ago that had a couple of

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Speaker 1: thousand lots available for development, but it had been through

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Speaker 1: uh thirteen public hearings over a three year time period

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Speaker 1: and still wasn't uh permited yet. You know, if you

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Speaker 1: considered what caught the carrying costs and the regulatory costs

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Speaker 1: of that, and then the fact that that wager rate

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Speaker 1: it's real wagerings and construction outbacks and the peak they

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Speaker 1: were in the boom at the peak of the boom,

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Speaker 1: that's not going to be affordable housing when it comes down.

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Speaker 1: Is it rent or by what is the research that

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Speaker 1: you show? I mean, I know you're in a buy

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Speaker 1: mode a mortgage, mode a venue may but we actually

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Speaker 1: we did the We financed about forty two billion dollars

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Speaker 1: well my family last year, so we're we're actually and

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Speaker 1: both owned and rented. Um. You know, the population UH

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Speaker 1: suggests today that the homewards it breaks about right, it's

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Speaker 1: sixty three percent. We're we're in the gene slowdown, and

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Speaker 1: then we'll see a pick up when the millennials come

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Speaker 1: back back to the sixty four maybe six or four

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Speaker 1: a half percent years down the road. So we're closed

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Speaker 1: to the balance. The problem is there's just not supply

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Speaker 1: on the low end, so it gets to that cost

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Speaker 1: problem that you're talking about, the accelerated share. I mean, Doug,

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Speaker 1: your world is the second biggest mail we get. The

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Speaker 1: first biggest mail we get is when somebody comes out

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Speaker 1: and announces there's no inflation and people who people go

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Speaker 1: mental when they see that. And the next biggest one, Mike,

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Speaker 1: we get is you gotta be kidding me. Unlocked, My

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Speaker 1: kids are locked, My grandchildren are lucked. They can never own.

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Speaker 1: I mean, how do we as a society fix down

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Speaker 1: on a huge number in too many of our cities

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Speaker 1: in towns. Well, that's um, twenty percent down. Only if

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Speaker 1: you don't want to pay mortgage insurance, you can get

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Speaker 1: higher LTV loans. We actually have a product called home Ready,

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Speaker 1: which is a loan to value. Obviously, the underwriting criteria

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Speaker 1: are the stronger to make sure that that putting only

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Speaker 1: three percent down means you're committed to the paying a mortgage.

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Speaker 1: But f h A has higher loan to value on products,

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Speaker 1: so it's UH and we have a range in it

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Speaker 1: include private mortgage insurance, so those things are available, but

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Speaker 1: you do have to be credit credit quality. The higher

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Speaker 1: the loan to value on the property, because the investors

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Speaker 1: will make sure that you're willing to pay that loan back.

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Speaker 1: The real issue is supplied might touched on it. UH.

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Speaker 1: You know, there's a lot of development restrictions in the

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Speaker 1: neighborhoods that are are controlling for lower density. That means

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Speaker 1: land is the most expensive component of building house because

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Speaker 1: UM there are restrictions on the size of lot developments,

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Speaker 1: so UM deregulation. I was talking to a couple of

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Speaker 1: builders talking about there are ways to improve productivity in building,

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Speaker 1: but you have to change all the local building codes

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Speaker 1: to import new technologies and that takes time. At set

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Speaker 1: market by in our market activities and building coast typically

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Speaker 1: are are local, douc thank you so much, Douglas Duncan

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Speaker 1: with Fannie May with a nice update there and house.

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Speaker 1: We like to do that question once a quarter, maybe

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Speaker 1: every hundred days. Get Dug Duncan in to give us

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Speaker 1: respective dock thank you so much, with Fannie May and

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Speaker 1: Freddie Mike McKie. I look at it and I will

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Speaker 1: say this, folks, with all good cheer. We are so framed, Mike,

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Speaker 1: by the world we live in. I mean, when you

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Speaker 1: think about opening the Sunday New York Times magazine or

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Speaker 1: I'm guessing the cheapest real estate in there is what

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Speaker 1: three millions, they're four million, They're they're appealing to a

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Speaker 1: different demographic than I and and the surrealness that we're

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Speaker 1: we're acutely aware to all of your nationwide coast to

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Speaker 1: coast on our different bloomer Boston Bloomer eleven three oh

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Speaker 1: and everybody out there. Mike and I are acutely aware

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Speaker 1: that where we live, what we do with our kids

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Speaker 1: is well not Doug Duncan's world. It's true in San

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Speaker 1: Francisco certainly as well. Um, you know, markets where limited

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Speaker 1: supply drives up the cost. How big is is it?

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Speaker 1: I'm looking around at retail sales tomorrow. How big a

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Speaker 1: deal is that. It's a reasonably big deal because if

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Speaker 1: you get a bad number, that's going to start um more.

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Speaker 1: Talk about the FED being pushed out just at a

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Speaker 1: time when maybe some FED officials are trying to pull

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Speaker 1: the idea of a radio increase closer in time, but

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Speaker 1: you know June would be the first time for the

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Speaker 1: realistically doing. You need to be with us tomorrow morning

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Speaker 1: eight thirty will go beneath the headline data with our

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Speaker 1: good guests and of course Michael McKee's big time perspective

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Speaker 1: on the nation's consumer. It is Bloomberg surveillance