Speaker 1: This is Bloomberg surveillance. What I think the markets are
Speaker 1: doing is adjusting to the fact that things are going
Speaker 1: to be lower longer. Interest rates is going to stay
Speaker 1: lower longer than people anticipate. Low inflation is very good
Speaker 1: for facts that has proven to be over the last
Speaker 1: fifty plus year. The biggest banks are still in my judgment,
Speaker 1: too big to fail, and if you had multiple banks
Speaker 1: run into trouble at the same time, they would still
Speaker 1: get bailed out. Bloomberg Surveillance your link to the world
Speaker 1: of economics, finance and investment on Bloomberg Radio. Good morning,
Speaker 1: I Michael McKee. It is seven am on Wall Street.
Speaker 1: One pm in Brussels, where David Cameron is still negotiating
Speaker 1: on an anti Brexit deal. Will get an update from
Speaker 1: Chatham House today. Here in the US, the political campaign
Speaker 1: gets no more enlightening. In fact, it gets more complicated.
Speaker 1: Stan collandar will be along in a bit and this
Speaker 1: you will want to pay attention to. PwC Energy industry
Speaker 1: analysts read Morrison on the outlook for industry bankruptcies ahead.
Speaker 1: We're getting closer to the time when the bank's reset
Speaker 1: the loans and some people aren't going to be able
Speaker 1: to pay. Speaking of energy and oil, oil prices are
Speaker 1: lower this morning. West Texas thirty seventeen is down almost
Speaker 1: two percent. It's a one point seven percent decline for
Speaker 1: brand thirty three. And with oil down, you know where
Speaker 1: stocks are. The stock six hundred is off by four
Speaker 1: points now one percent, The decks down a hundred and
Speaker 1: five one point one percent. The foot seas off thirty nine.
Speaker 1: That's seven tenths. But we'll give them a little bit
Speaker 1: of a break on the oil question because they're still
Speaker 1: uncertainty in England about what's going on with Brexit UH.
Speaker 1: The pound five is lower right now here. In the US,
Speaker 1: futures significantly lower following yesterday's uh slight sell off s
Speaker 1: ANDP futures down nine points half a percent a half
Speaker 1: percent to clide for DOWBT even in futures seventy four
Speaker 1: points and NASDAC features are down twenty two that's half
Speaker 1: eight percent as well. The money seems to be going
Speaker 1: into the yen yen stronger today one eighty two. Albonix
Speaker 1: suffering not going into the year. Y're a one eleven
Speaker 1: O seven is flat on the day. It does seem
Speaker 1: to be going into bonds, though ten year note yield
Speaker 1: is down to one point seven two one eighteen for
Speaker 1: your five year and the two year at sixte basis points.
Speaker 1: The German two year now down to a negative fifty
Speaker 1: four basis points. So you can see what is happening.
Speaker 1: Oil is lower, but industrial metals are higher today. I
Speaker 1: hadn't noticed this until somebody pointed it out to me.
Speaker 1: Um I mentioned it because you may not realize that
Speaker 1: in all the gloom, commodities overall are not doing what
Speaker 1: you might think. The Bloomberg Commodity Index is up more
Speaker 1: than three percent over the last thirty days. Hamsa Khan's
Speaker 1: head of Commodities strategy for I n G. He joins us, Now,
Speaker 1: uh we, I mean the story was that commodities were
Speaker 1: in this never ending slump and dragging the global economy
Speaker 1: down with them, and it was being led by oil.
Speaker 1: And oil is volatile, but it's still in arrange. But
Speaker 1: the rest of the commodities world seems to be flattening out.
Speaker 1: Have we put in a bottom homes Michael means you're
Speaker 1: having me absolutely. We're seeing the influence of the pb
Speaker 1: O C and the ECV stepping in and saying their
Speaker 1: supporting markets, improving the outlook for industrial medals in China,
Speaker 1: and we're seeing that reflected in copper prices and U prices.
Speaker 1: Oil still has something of the hangover, due in part
Speaker 1: to the big building stories that we saw yesterday, due
Speaker 1: to the huge inventory levels around the world, and due
Speaker 1: to the Saudi rush of Venezuela, Iran and Iraq talk.
Speaker 1: So I think we're now moving into a phase where, yes,
Speaker 1: there could still be weakness for specific commodities, but as
Speaker 1: we looked at the broader picture for the commodity conflicts
Speaker 1: as a whole and the economies as a whole moving
Speaker 1: at second half during sixteen, there seems to be more
Speaker 1: for the upside of there is on the downside. Let's
Speaker 1: take a well out of the question for a moment,
Speaker 1: because we talk about it infinitem UH, and ask what
Speaker 1: other commodities are seeing action at this point. I when
Speaker 1: when you look at an economy from an economic point
Speaker 1: of view, I always go to copper, and I was
Speaker 1: surprised to see that copper is generally strong right now.
Speaker 1: Not strong, I don't want to make that go too far,
Speaker 1: but has flattened out and is up a little bit. Yeah. Absolutely,
Speaker 1: I think it's um it's an indicative of the huge
Speaker 1: sell off that we've seen in the last two years
Speaker 1: that we can see prices for copper creating at the
Speaker 1: four a half thousand level and still consider that bullish.
Speaker 1: But I think people are now looking at the level
Speaker 1: of cast production costs. They're saying before is beginning to
Speaker 1: be established because we were simply running out of the
Speaker 1: ability to mine at tour levels, whether that's your high
Speaker 1: quality um box side or your copper producers simply cannot
Speaker 1: provide at card price levels. And that sets up a
Speaker 1: supercycle in the future. And if you're a trader, you're
Speaker 1: a smart guy. Do you want to wait until prices
Speaker 1: are significantly higher into dozen septeen mate and then put
Speaker 1: in your long position or do you want to start
Speaker 1: positioning yourself earlier? And that's I think what we're seeing
Speaker 1: in the industrial battle. I have to stop you there
Speaker 1: and ask you what you said the words supercycle. There's
Speaker 1: a difference between going up, even a cyclical rise, and
Speaker 1: a supercycle, which you know we think of as lasting
Speaker 1: years or decades. Right, So if we're if we're not
Speaker 1: investing in infrastructure today, it can take us much longer
Speaker 1: than we expect to bring production dot on line. The
Speaker 1: example here would be the US all industry in the
Speaker 1: eighties and the nineties, when we shut in production due
Speaker 1: to very low prices in the eighties. When we try
Speaker 1: to bring those US all fields back online and the
Speaker 1: nineties and prices began to go higher, discovered we weren't
Speaker 1: able to and that set up the two thousand commodity boom.
Speaker 1: So we were in the risk of a similar situation
Speaker 1: forming in the future. Ham's a Cohn with us with
Speaker 1: I n G. As we look at commodity marks. As
Speaker 1: Michael said, a contrary to the gloom, Uh, some of
Speaker 1: the commodities are actually had a pretty remarkable week. Chicago
Speaker 1: copper two oh seven fifty, of course, breaching two d
Speaker 1: um a while back. Good morning everyone, Bloomberg Surveillance this
Speaker 1: Friday brought you by Investco. Don't settle for average in
Speaker 1: your portfolio to invest go the right approach means investing
Speaker 1: with high conviction. Find out more at investco dot com
Speaker 1: slash high conviction. Uh, Michael, what I would see on
Speaker 1: the screen as a German two year I mean all
Speaker 1: the yields are in as they were yesterday. On actually
Speaker 1: the US two year breaking down right now ever so slightly,
Speaker 1: but the German two years really beginning to make about
Speaker 1: back towards February eleven. Lows. We're not there yet, but
Speaker 1: nevertheless there it is. Well, there's a lot of nervousness,
Speaker 1: everybody says about what's going on in Brussels. Yeah, and
Speaker 1: Caroline Hy'd been very clear, we really don't know when
Speaker 1: the meeting is. They're trying to give him agreement. Yeah,
Speaker 1: we'll keep everybody informed on it. I's a kind with
Speaker 1: us again, as we look at COMI I see a
Speaker 1: soggy nous in oil. Stephen Short with us a short
Speaker 1: report earlier this week, remarkably ambivalent about which way it goes.
Speaker 1: Do you have a conviction on oil? I have a
Speaker 1: very strong conviction that if demand goes higher or persons
Speaker 1: will go higher, because we talked about over supplying the market,
Speaker 1: and we talked about a lot of battle if you
Speaker 1: talk about a lot of stories, and in the short term,
Speaker 1: absolutely that's going to be to for instance, this all
Speaker 1: off we saw after view report. But in the long run,
Speaker 1: we're talking to three months six months if the US
Speaker 1: equities recover, if the Asian markets recover all is going higher,
Speaker 1: and I can't be more emphatic about that. What about
Speaker 1: beyond um oil and gas, because they seem to be
Speaker 1: writing on supply and demand as opposed to UM demand
Speaker 1: only in some of the other commodities UM. When you
Speaker 1: look at industrial metals and I'm talking lead, zinc, UH,
Speaker 1: that sort of thing, UH is there is there a
Speaker 1: feeling that the markets are in balance and we're just
Speaker 1: looking for a renewal of demand brought about by these
Speaker 1: central banks, or is there a big overhang there as
Speaker 1: well that's going to keep prices depressed for a long time, right,
Speaker 1: So that will depend on on the on the specific medals. So,
Speaker 1: for for instance, with iron or I think everyone's expecting
Speaker 1: a large amount of supply to remain depressed prices, Whereas
Speaker 1: when it comes to aluminum, the rest of the world
Speaker 1: outside of China isn't something of a deficit. So there
Speaker 1: are opportunities for UH imbalances and supply and demand. And
Speaker 1: I think what people sometimes overlook is that yes, we
Speaker 1: have very large inventories, but if you look at the
Speaker 1: absolute consumption numbers, whether that's the for your copper or
Speaker 1: for your little we can words very quickly, and we
Speaker 1: have been If you look at the ELM inventory levels,
Speaker 1: levels the metal, they've all been trending lower. You're in
Speaker 1: the trenches on this. How do you respond when somebody
Speaker 1: away from your strategy bent says we're waiting for corporate
Speaker 1: balance sheets to clear. Are we seeing national and corporate
Speaker 1: balance sheets clearing bad will in mining? Is that process occurring? Absolutely? So?
Speaker 1: I was, I was in I was in Houston talking
Speaker 1: to someone to be all on gas producers last week
Speaker 1: I was, I was in Singapore talking to the to
Speaker 1: the iron norm producers, and we're seeing a lot of
Speaker 1: companies stepping in to figure out. I think that their
Speaker 1: backs to the wall. There's smart people to are figuring
Speaker 1: out how can we survive in a twenty dollar for
Speaker 1: vowel environment Hams to thank you so much, ham to
Speaker 1: con with iron U g uh with us, harm to
Speaker 1: con thank you again so much. On Mike I, I really,
Speaker 1: you know, with commodities you lose sight because there's so
Speaker 1: many to follow. Look at natural gas one point eight
Speaker 1: four six really legging down this week towards Lowe's scene
Speaker 1: in December. Well yeah, I mean, I mean, obviously that's it,
Speaker 1: But the fact is I can't say enough, you know, Caroline,
Speaker 1: I use the phrase messy the indeterminate nature of market
Speaker 1: action this week, Mike, I haven't seen in ages like you.
Speaker 1: Really don't even know where different asset classes are going
Speaker 1: in their correlations as well, and they may even move
Speaker 1: through the morning. That John Deere headlines, I think really
Speaker 1: put a weight. Uh you know, we're flat green on
Speaker 1: the screen. Actually right now futures negative nine, Dow futures
Speaker 1: negative seventies. John Deere sharply adjusted their view forward this
Speaker 1: hour of surveillance. Spot you by mansdo white planes visit
Speaker 1: masdo white planes dot com? Here's Michael bar with headlines.
Speaker 1: My time. We have to developing news. American war planes
Speaker 1: have struck multiple targets in Libya overnight, hitting what was
Speaker 1: apparently an Islamic state training camp and a senior extremist leader.
Speaker 1: That is according to a US official who did not
Speaker 1: want to be identified. Supreme Court officials say Justice Anton
Speaker 1: and Scalia's casket will arrive this morning to be carried
Speaker 1: up the court steps to the Great Hall, where it
Speaker 1: will lie in repose. Thousands of mourners, including President of Baba,
Speaker 1: members of Congress, former Justices and tourists will pay their
Speaker 1: respects to one of the court's most influential members. Funeral
Speaker 1: mass for Scalia will be held tomorrow. The lawyer for
Speaker 1: a Texas teenager who used an affluenza defense and a
Speaker 1: fatal drunken driving wreck has said he will not challenge
Speaker 1: a transfer of the case to adult court. Eighteen year
Speaker 1: old Ethan Couches due to appear in court today for
Speaker 1: hearing on the question. Global News twenty four hours a day,
Speaker 1: powered by our journalists him Michael Barr to Michael, thanks
Speaker 1: so much, West Texas thirty dollars eleven cents wait to
Speaker 1: the day, but not through to a twenty nine handle
Speaker 1: yet from New York of Bloomberg Surveillance. Bloomberg Surveillance brought
Speaker 1: to buy your Tri State BMW centers. Visit the online
Speaker 1: at tri State BMW dot com. At BMW they make
Speaker 1: only one thing, the ultimate driving machine. Global Business News
Speaker 1: twenty four hours a day at Bloomberg dot Com, the
Speaker 1: radio plus mobile app, and on your radio. This is
Speaker 1: a Bloomberg Business Flash and I'm Kerra in Moscow. This
Speaker 1: updates brought to you by c I T. From transportation
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Speaker 1: Learn more at c I T dot com put Knowledge
Speaker 1: to Work. Deer In Company down almost two percent this morning,
Speaker 1: the world's largest agricultural equipment maker, cutting its fiscal full
Speaker 1: year profit and sales forecast. I mean a worsening outlook
Speaker 1: for farmers as they face declining incomes. US DOT Index
Speaker 1: futures me while lower along with oil prices, smp E
Speaker 1: Many futures down seven points, now E Many futures down
Speaker 1: sixty four, nazdak E Many futures down eighteen. DAX in
Speaker 1: Germany's down nine tenths per cent, tenure treasury of four
Speaker 1: thirty seconds, the yeld one point seven two percent, nom
Speaker 1: X screwed oil down two percent or sixty cents to
Speaker 1: thirty dollars seventeen cents of arrol Comax Gold up seven
Speaker 1: tenths percent or eight dollars ten cents to twelve thirty
Speaker 1: four or forty ounce. The euro and dollar eleven twelve,
Speaker 1: the N one twelve point eight three. That's a Bloomberg
Speaker 1: business flash. Tom and Mike, thank you, Karen Well. If
Speaker 1: if anything, it's almost hard to believe that the presidential
Speaker 1: race could get more toxic, but it did yesterday with
Speaker 1: the Pope getting involved at Donald Trump, etcetera. Uh, anything
Speaker 1: but edifying. One of the things that is now becoming
Speaker 1: clear is that the collateral damage out of all this
Speaker 1: is going to be trust. What trust is remaining in Washington?
Speaker 1: And our government has all the candidates run around talking
Speaker 1: about how we have a terrible, terrible, terrible government in Washington.
Speaker 1: Stan Colliner has to deal with that government on a
Speaker 1: daily basis. He is an executive vice president National director
Speaker 1: of Financial Communications for the MSL Group. And uh stand,
Speaker 1: I'm just wondering what real estate prices are like in
Speaker 1: Washington these days. I mean, is it like, you know,
Speaker 1: nobody's gonna be able to sell their house because nobody
Speaker 1: wants to go and live in toxic Washington. Well, usually
Speaker 1: what happens. It's funny you should ask. Um. The real
Speaker 1: estate prices in the Washington area completely depended on the
Speaker 1: election cycle, and they vary depending upon whether a Democrat
Speaker 1: or a Republican is more likely to get elected. Republicans
Speaker 1: tend to buy in the suburbs. Um So, given that
Speaker 1: everything is on hold at the moment, because things are
Speaker 1: so crazy or couldn't get much crazier. We think, Uh,
Speaker 1: the real estate is not moving as quickly in Washington
Speaker 1: as he used to. You just said a funny saying,
Speaker 1: couldn't get much crazier, And then that's what we said
Speaker 1: last week. And then antonin Scalia dies and now it's crazier. Yeah,
Speaker 1: and now the Pope of course decided that he was
Speaker 1: part of the US election process. Um, I wasn't his fault.
Speaker 1: It was a reporter's fault. But anyway, but but still,
Speaker 1: um uh, these are things and you should expect more
Speaker 1: unexpected things. And this is the time in the election
Speaker 1: that candidates can't plan for everything happening. And what we
Speaker 1: used to do in a general election call in October
Speaker 1: surprise now is becoming a February surprise and March surprise, etcetera, etcetera.
Speaker 1: We can't do anything about what the candidates are doing
Speaker 1: and saying out there, but we do have to worry
Speaker 1: about what is actually happening the companies and investors who
Speaker 1: are listening to us. Um, I want to know what
Speaker 1: is going to happen, what is happening in Washington? And
Speaker 1: I guess uh from your notes nothing at this point,
Speaker 1: it's happening anymore because of what's going on. Well, not
Speaker 1: only is nothing happening, but you should expect the market
Speaker 1: should expect that Washington is basically going to be dysfunctional
Speaker 1: for the rest of the year. Maybe next year too,
Speaker 1: But let's just deal with this year. Let's let's jump
Speaker 1: into that. I think it's with your we should explain
Speaker 1: your experience. You spent years up on Capitol Hill with
Speaker 1: finance and fiscal and budget matters. Is an outsider to
Speaker 1: the judicial process. What are you watching for in the
Speaker 1: coming weeks and months. Well, the first thing is you
Speaker 1: would expect the Democrats to uh go after Mitch McConnell
Speaker 1: in a variety of ways using the legislation, the legislative
Speaker 1: processes they they can. Basically because of his comments of
Speaker 1: post the Justice Scalis death, Uh, they'll slow down the
Speaker 1: appropriations process to the point where not much is going
Speaker 1: to happen until the very end of the fiscal year,
Speaker 1: uh or the beginning of the next year. And that's
Speaker 1: exactly the opposite of what he expected. But also things
Speaker 1: like tax reform not going anywhere. Um. And the biggest
Speaker 1: thing you had on on yesterday Larry Larry. Yes, I'm
Speaker 1: just saying we need fiscal policy. There is gonna be
Speaker 1: no fiscal policy. Whatever happens on the budget will happen
Speaker 1: by accident, not intentionally. Well, if, um, if we're going
Speaker 1: to stop everything, is that necessarily a bad thing. It's
Speaker 1: been argued for years that the best scenario for Wall
Speaker 1: Street is that Washington is be calmed because nothing negative
Speaker 1: happens and there's a certain certainty uh to policy. Well,
Speaker 1: that would be fine if the economy were doing well
Speaker 1: in the expectations where that it was going to continue
Speaker 1: to do well, but with the Fed having limited amounts
Speaker 1: of limited tools at its disposal, uh, and you would
Speaker 1: expect or you would the markets would help that Washington
Speaker 1: would be functioning better so that if they needed to
Speaker 1: do something, they could. Um. That's what that's the real
Speaker 1: fallacy about. Let's just have Washington do nothing first of all, Um,
Speaker 1: that's only good when you don't need Washington to do something.
Speaker 1: And at this point, there are a lot of folks
Speaker 1: to say there are some things that should be done,
Speaker 1: some sort of stimulus plan at tax cut something like
Speaker 1: that to keep the economy going. But um, you remember,
Speaker 1: the big thing is expectation here and right now, there's
Speaker 1: no way you can expect what Washington is doing with
Speaker 1: any gree certainty or confidence. But if you're a if
Speaker 1: you're a serious investor, and you're following all this, you're
Speaker 1: not expecting any kind of even absent the poisonous atmosphere
Speaker 1: we've got, you're not expecting any kind of fiscal action.
Speaker 1: I mean, all the talk about Washington should do something is,
Speaker 1: as near as I can tell, from outside the belt Way,
Speaker 1: anybody in Washington actually saying, well, maybe it would be
Speaker 1: a good idea to pass something. Um, well, there are
Speaker 1: a lot of things that some people would like to pass,
Speaker 1: for example, international tax reform or corporate tax reform. Um
Speaker 1: there are things that people would like that's just not
Speaker 1: going to happen. And the question here is when could
Speaker 1: it happen? I mean, we're looking at is not just
Speaker 1: a uh freeze in place situation for the rest of
Speaker 1: this year, but possibly for the next couple of years
Speaker 1: as well, with the Senate maybe turning hands narrowly or
Speaker 1: you know, so not much gonna go on or where
Speaker 1: are we then, with with all of that background, quickly, here,
Speaker 1: where are we on sequest your so shutdown, and the
Speaker 1: rest of it is that all old news are those
Speaker 1: options that use study. Um they're options, but they're not
Speaker 1: They're very very less likely. It's very less likely, but
Speaker 1: very less likely. We don't get the shock at all,
Speaker 1: and and there's no debt sailing issue this year. At
Speaker 1: stan Colindar, we'll talk to him about the fiscal discussion.
Speaker 1: On the campaign trail, We've got to review what have
Speaker 1: we got Mike, South Carolina and Nevada for the Democrats
Speaker 1: this weekend for the Democrats and then the Democrats go
Speaker 1: back to South Carolina win a week for a week
Speaker 1: from sat and the Republicans go to Nevada on Tuesday.
Speaker 1: Go figure, what does stan Colendar here out on the
Speaker 1: campaign trail. Maybe it's different than Mike McKie and I
Speaker 1: here or don't here as well? To discuss that with
Speaker 1: Stanley Colendar of Corvus MSL Group Features to review or
Speaker 1: flat John Deere with a bombshell forecast week week forecast
Speaker 1: forward futures to tier eight, negative eight, Dow features negative
Speaker 1: sixty seven oil got down to thirty dollars and a
Speaker 1: penny looking for a twenty nine handle on West Texas Intermediate.
Speaker 1: It is a good Friday morning. We want you to
Speaker 1: stay with us, My McKee and Tom Key Bloomberg Surveillance.
Speaker 1: Bloomberg Surveillance is brought to you by your Mercedes Benz
Speaker 1: Tri State Dealer. When it comes to winter elements, put
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Speaker 1: Bloomberg Radio Plus happened Bloomberg dot Com. This is Bloomberg Surveillance.
Speaker 1: Good morning. I'm Michael McKee. Seven thirty on Wall Street
Speaker 1: t G I f A. Wall Street struggles to find
Speaker 1: a reason to go higher this morning, John Dear, Now
Speaker 1: it's called Deer in Company. Some of us are all
Speaker 1: enough to remember. John, the world's largest stagger culture maker,
Speaker 1: cutting its fiscal full year profit and sales forecast, worsening
Speaker 1: outlook for farmers these days. Deer shares down one point
Speaker 1: three on the good news side, shares of applied materials
Speaker 1: are up almost nine percent. The largest maker of the
Speaker 1: machines that produced computer chips predicted sales this quarter that
Speaker 1: could beat analysts estimates. Starwood Hotel CEO says that company
Speaker 1: maybe in talks to sell properties, including the St. Regis
Speaker 1: in New York, and City Group increased chief executive Mike
Speaker 1: Corbett's compensation. He made sixteen and a half million dollars
Speaker 1: last year. Now, let's check out with Michael Barr and
Speaker 1: yet the latest world and national headlines. MIKEL, Mike, thank
Speaker 1: you very much. A US officials says American war planes
Speaker 1: at multiple targets in Libya overnight. The officials says one
Speaker 1: of the targets hit was an Islamic State training camp
Speaker 1: and also a senior extremist leader was also hit. The
Speaker 1: official says at least thirty Islamic State recruits were killed.
Speaker 1: The casket carrying Supreme Court Justice Antonin Scali elbow Lyon
Speaker 1: propose at the Supreme Court thousands of mornings will pay
Speaker 1: their respects today a funeral mass where schooling it will
Speaker 1: take place tomorrow. The I R S is issuing a
Speaker 1: new Morning about email scams. Crooks are sending out more
Speaker 1: bogus links and fake websites than ever to try and
Speaker 1: get access to taxpayers personal data and bank account numbers.
Speaker 1: Senior i R spokesperson Terry Lemons tells us the messages
Speaker 1: look official, but they're not. If you year at tax
Speaker 1: time we see a real uptick in tax scams, but
Speaker 1: this year so far, we've seen a real surge of
Speaker 1: these email phishing incidents. Lemons says, if you do come
Speaker 1: across one of these emails, just hit the lete. Forecasters
Speaker 1: say this could be a busy hurricane season in the Atlantic.
Speaker 1: The co founder of Weather Underground in ann Arbor, Michigan,
Speaker 1: says he is looking for a lot more activity than
Speaker 1: we had last year with the removal of Elnino Global
Speaker 1: News twenty four hours a day, powered by our journalists
Speaker 1: more than a hundred fifty news bureaus from around the world.
Speaker 1: I am Michael Barr, Mike, thank you, miach all the time.
Speaker 1: Now for the Katina Auto Group Bloomberg NBC Sports update,
Speaker 1: Here's rub Bush. Good morning, Mike. Rangers continue to impress
Speaker 1: down the stretch as they scored it a minute and
Speaker 1: a half left to break a two all tie in
Speaker 1: Toronto Forts fact of Prussher Miller where they'll take away
Speaker 1: Filler Torello, the shot star Derek step On off of
Speaker 1: great play by J. T. Leeward at the Rangers played
Speaker 1: print of two that's MSG on the call. Derek Brossard
Speaker 1: added an empty Netters New York topped the Leaves four
Speaker 1: to two. Rangers or third in the East. They've won
Speaker 1: seven of ten. The news not so good for the Islanders,
Speaker 1: who had the misfortunate of hosting the best record in
Speaker 1: the game. The Washington Capitol's League MVP candidate Alexevetkin notched
Speaker 1: a pair of goals. He has thirty seven on the year.
Speaker 1: Cats one three to two in overtime. The Islander is
Speaker 1: still in good shape, though their fifth seed in the
Speaker 1: East devils on the outside looking in. They had the
Speaker 1: night off, as did both local basketball teams, but they're
Speaker 1: both on the court tonight squaring off with one another,
Speaker 1: and prior to the game, the Knicks they will or
Speaker 1: the Annets will introduce their new and general manager, Shawn
Speaker 1: Marks in a press conference, and Major League Baseball pitchers
Speaker 1: and catchers have reported grateful league action starts made first
Speaker 1: at Your NBC Bloomberg Sports Update, Mike, thank you Rob.
Speaker 1: Right now, futures lower, SMP futures off by six points.
Speaker 1: That's three tenths of eight percent. Same percentage declined for
Speaker 1: doubt futures. They're off fifty three now as that features
Speaker 1: down fifteen right now, four tenths of a percent. This
Speaker 1: is Bloomberg Radio worldwide, and you are listening to Bloomberg Surveillance.
Speaker 1: I'm Michael McKee along with Tom Keene, where watching stocks
Speaker 1: trying to get higher. Europe lower as well. Three points
Speaker 1: down on the stock six now, nine tenths of a percent.
Speaker 1: Foot see off by twenty seven points half a percent.
Speaker 1: They of course engaged in the process of trying to
Speaker 1: negotiate a deal that would keep them in the European Union,
Speaker 1: and that has everybody on tenter hooks in the markets
Speaker 1: over there. We'll keep you up to date on that
Speaker 1: and coming up in a little while we will, but
Speaker 1: what we'll call it forty five minutes from now, we'll
Speaker 1: get an update from Chatham House on the negotiations and
Speaker 1: what we might expect. Now it is time for the
Speaker 1: Bloomberg n j I t STEM Report, brought to you
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Speaker 1: j I, T dot, E d U and Good Morning, Michael.
Speaker 1: It is seven thirty five on Wall Street. Here's what's
Speaker 1: making news in science, technology, engineering, and math. Story on
Speaker 1: the Bloomberg Today details how the government was working on
Speaker 1: a Plan B. Around the same time last year, it
Speaker 1: seemed to be backing off its pressure on technology makers
Speaker 1: to install back door entry into their software. A secret
Speaker 1: meeting convened by the White House led to an order
Speaker 1: for agencies across the US government to develop encryption workarounds
Speaker 1: and find ways to gain access to the most heavily
Speaker 1: protected user data on the most secure consumer devices, including
Speaker 1: the iPhone. Now, Apple is back in the crosshairs with
Speaker 1: that court order to help the government gain access to
Speaker 1: the cell phone used by a California terrorist, and the
Speaker 1: battle of words is raging even before Apple delivers its
Speaker 1: court response. New York Police Commissioner William Bratton and Manhattan
Speaker 1: District Attorney Cyrus Vance Jr. Held a news conference to
Speaker 1: weigh in, Vance, complaining the tech companies have created the
Speaker 1: first warrant proof consumer products. This has become ladies and
Speaker 1: gentlemen the wild West in technology, Apple and Google are
Speaker 1: their own sheriffs. There are no rules. This is a
Speaker 1: decision where to draw the line between public safety and
Speaker 1: privacy that needs to be made by independent players, the
Speaker 1: legislature and the courts, not by two companies who have
Speaker 1: drawn the line coincidentally at a place which coincides with
Speaker 1: their economic self interest. People familiar with the matter of say,
Speaker 1: Apple now has a little extra time to answer the
Speaker 1: court order. Its response now due a week from today.
Speaker 1: And that's this morning's Bloomberg and j I. T. Stem Report. Michael,
Speaker 1: thank you very much, Baboon. We're talking with Stan Collender,
Speaker 1: who is executive vice president of National director for Financial
Speaker 1: Communications for M s L Group in Washington. He has
Speaker 1: made his way north. Nobody wants to be in Washington
Speaker 1: these days, and the presidential candidates say it's such a
Speaker 1: terrible place. So it's understandable you would come up to
Speaker 1: New York. Not to mention a lot of my clients
Speaker 1: are here and at the food is better. Not according
Speaker 1: to Tom Seats by the Washington Post, who wrote a
Speaker 1: really nasty column the other day denigrating New York restaurants.
Speaker 1: We're talking about that yesterday with UH when we were
Speaker 1: doing our dining segment. Well, we should talk about pizza
Speaker 1: and corn beef and bagels. Anyway, some other times we'll
Speaker 1: throw that up. You've been around Washington a long time.
Speaker 1: I spend an off a long time in Washington. You
Speaker 1: and I go back to when Vice President William Wheeler
Speaker 1: was presiding over the Senate, UH, back in the eighteen seventies,
Speaker 1: and I suppose yourself you almost have to go back
Speaker 1: that far to think of a time when relations on
Speaker 1: the Senate floor were as bad as they are now.
Speaker 1: I mean, in the recon in the reconstruction era, of
Speaker 1: course you had people taining each other. We haven't gotten
Speaker 1: to that point yet. But now that we have this
Speaker 1: Supreme Court fight coming up in a place where the
Speaker 1: premium is on hating thy neighbor, how is this going
Speaker 1: to end up changing the Senate? I mean, can it
Speaker 1: get any worse going forward? Oh? Yeah? I mean, first
Speaker 1: of all, don't never say never. But here's the difference.
Speaker 1: Now it's not just partisan, it's inter party fights. Um,
Speaker 1: you've got the Senate with Republicans have the majority, but
Speaker 1: the Republican majority hates take crews, and so he can't
Speaker 1: do anything on the floor. Um, you've got Democrats who
Speaker 1: won't work with Democrats, not just Democrats who won't work
Speaker 1: with Republicans and vice versa. Uh. So you've got this
Speaker 1: situation now among the people I speak with on a
Speaker 1: regular basis inside the Beltway or immediately outside, Uh, we're
Speaker 1: all looking at each other going, what the hell is
Speaker 1: going on? There's nothing here that makes any sense. Then
Speaker 1: nothing here in the previous experience that it describes quite
Speaker 1: what's going on here where where? You know? It's the
Speaker 1: fight on the budget this year, what I'm very familiar
Speaker 1: with is going to be a Republican versus Republican fight.
Speaker 1: It's going to be Republicans in the House versus the
Speaker 1: Republicans in the Senate, and it maybe some Republicans in
Speaker 1: the House their Freedom Caucus versus other Republicans in the House.
Speaker 1: Democrats are just gonna sit back and watch. In the meantime,
Speaker 1: you've got a House and senator Congress that's not working,
Speaker 1: a lame dog president, and now we've got a four
Speaker 1: four Supreme Court, and you've got people screaming at the
Speaker 1: Fed saying don't do anything or we don't like what
Speaker 1: you are doing. So what institution is actually working and
Speaker 1: for the market? Which institution involved with economic policy is
Speaker 1: actually going to do its job over the next year.
Speaker 1: That's the question I keep asking which one is capable
Speaker 1: of doing it? Did Tom delay win? I mean, what
Speaker 1: you're describing is the ultimate goal of a certain wing
Speaker 1: of the Republican Party to completely sort of shut down Washington.
Speaker 1: I don't know if you could say Tom delay one that.
Speaker 1: I mean, there are clearly a lot of people who
Speaker 1: are driving dissatisfaction with government. But the interesting thing is
Speaker 1: they're driving dissatisfaction and government so that they can take
Speaker 1: over the government and have it do what it want
Speaker 1: what they want. So it's a temporary kind of thing.
Speaker 1: It's just it's a tactic as opposed to a you know,
Speaker 1: a permanent strategy. Um it noticed that it's all this
Speaker 1: dissatisfaction is not reducing the amount of the government spending
Speaker 1: where the number of federal departments um. In fact, if anything,
Speaker 1: last year, the Republicans pushed through a tax bill that
Speaker 1: increased the deficit and increase to the government borrowing. So
Speaker 1: that's not changing. It's just changing the appearance of who's
Speaker 1: in charge and who's making it happen. All Right, Stan
Speaker 1: Calendar from MSL Group in Washington, always making us feel
Speaker 1: better on a on a Friday morning. Uh, we we're
Speaker 1: talking about what's going on in the political world of Washington,
Speaker 1: d C. Where you can listen to Blo Brig Grady
Speaker 1: point one FM every day and keep up with the
Speaker 1: latest news on what's happening. And I was gonna say,
Speaker 1: what's happening and what's not happening in Washington on Wall Street.
Speaker 1: What is happening is that we're standing for a lower open.
Speaker 1: It looks like S and P futures down six points
Speaker 1: three tenths of eight percent. We're kind of get out
Speaker 1: of the opening bell. Brought to you by the refined
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Speaker 1: official vehicle of Killington Resort. Global business news twenty four
Speaker 1: hours a day at Bloomberg dot com, the Radio plus
Speaker 1: mobile and on your radio. This is a Bloomberg Business
Speaker 1: Flash and I'm Karen Moscow. This updates brought to you
Speaker 1: by c b o E r m C. Come to
Speaker 1: the c b o E Risk Management Conference February twenty
Speaker 1: nine to March second at the highest regency, Coconut Point, Florida.
Speaker 1: Register and learn more at c b O E r
Speaker 1: ms C US dot com. US DOCK Index futures are
Speaker 1: lower to mirror a slide in oil prices, an indication
Speaker 1: the SNP five will pair a relief rally that's put
Speaker 1: it on track for the best week since November. We
Speaker 1: checked the markets every fifteen minutes throughout the trading day
Speaker 1: on Bloomberg. SNP Emuni futures down five and a half
Speaker 1: points to DOWNI mini futures down forty nine, NASA documuny
Speaker 1: futures down fourteen. The decks in Germany's down six tenths
Speaker 1: per cent. Ten Your treasury up to thirty seconds, the
Speaker 1: yield one point seven three percent. NIMEX screwed oil down
Speaker 1: one point six per cent or fifty cents to thirty
Speaker 1: dollars twenty seven cents of barrel comes gold a half
Speaker 1: percent or six dollars to twelve thirty two thirty an ounce.
Speaker 1: The euro at a dollar eleven fourteen, The N one
Speaker 1: twelve point nine five deer in company down about one
Speaker 1: point seven percent this morning after cutting its full year
Speaker 1: profit in sales forecast. Northstrom down more than eight percent
Speaker 1: after posting holiday results. Dell fell short of projections and
Speaker 1: apply materials. It's moving higher. It's up eight and a
Speaker 1: half percent after its quarterly sales forecast exceeded the average
Speaker 1: analysts estimate. That's a Bloomberg business flash. Tom and Mike Kin,
Speaker 1: thank you very much. Still want to stand Callandar, National
Speaker 1: director of financial Communications for M s L Group. We're
Speaker 1: talking about Washington, d C. We We've talked about the
Speaker 1: depressing aspects of it, and so now let's get into
Speaker 1: the depressing aspects of it. We have a big Supreme
Speaker 1: Court fight coming up. Uh. We don't even know exactly
Speaker 1: how this is going to play out in terms of
Speaker 1: you know, who the President is going to nominate and
Speaker 1: how the Republicans will actually respond when they do. But
Speaker 1: what is your best guess because there are a lot
Speaker 1: of cases uh before the court now awaiting decision and
Speaker 1: cases that will be considered for certain that involved business
Speaker 1: and people want to when you're talking about a swing
Speaker 1: in the Court as as big as this one could be.
Speaker 1: People want to know what's gonna happen. Well, all right, uh,
Speaker 1: crystal ball. Obviously, first of all, you've had a lot
Speaker 1: of the decisions we were expecting to be five four. Uh,
Speaker 1: they will be unless there are changes in the way
Speaker 1: the judges are planned. Justices are planning on voting, they'll
Speaker 1: be four for and not moving forward. That will leave
Speaker 1: the lower court decisions in place. Interesting thing is many
Speaker 1: of those Lower Court decisions were done by Democratic judges
Speaker 1: appointed by Obama, So in many respects he wins both
Speaker 1: the president wins with decisions that stay in place for
Speaker 1: a little while longer. Um. The bigger question is whether
Speaker 1: or not any Supreme Court justice can be nominated and
Speaker 1: approved confirmed this year. The likelihood of that happening is
Speaker 1: very small. If you were to have a cup of
Speaker 1: coffee in Boston or Washington, San Francisco, Tulsa, Oklahoma, what
Speaker 1: would you say is the biggest misconception of how we
Speaker 1: choose our judicial leaders. Well, that we we do it
Speaker 1: on the basis of merit, on on quality. Instead, you've
Speaker 1: got if you listen to it now, it's people want
Speaker 1: to maintain the ideological balance the current ideological balance in
Speaker 1: the court of that they're appointed because they're appointed by life.
Speaker 1: You don't want to lame duck president appointing it. Regardless
Speaker 1: of out qualified someone could be. UM. The judicial nomination
Speaker 1: process is as political as anything in Washington, maybe more political,
Speaker 1: because judges are appointed for life. And what is it
Speaker 1: within your reading? I mean, Mike and I are invested
Speaker 1: in this, like are all Americans. But within your reading
Speaker 1: in the last few days, is the president likely to
Speaker 1: go with the centrist? I mean, I think I've heard
Speaker 1: Justice Kennedy speak three times, and he defines the middle ground.
Speaker 1: I would be surprised if he did. Uh the second
Speaker 1: person to say that on the show, And I'll tell
Speaker 1: you why, because I don't think there's any expectation that
Speaker 1: whoever is nominated will move forward so that the nomination
Speaker 1: itself will have political significance. He will probably pick in
Speaker 1: And again he doesn't call me and ask for my
Speaker 1: opinion on this. But if I were abetting man, I
Speaker 1: would say the president is likely to pick somebody who,
Speaker 1: by virtue of his or her nomination, will will get
Speaker 1: the Democrats and points at the next election. That's an
Speaker 1: interesting um an issuting viewpoint, because whomever it is, the
Speaker 1: more liberal they are, the less likely there's any chance
Speaker 1: that they get confirmed, of course, but then there's no
Speaker 1: promise that they would be renominated by the next president.
Speaker 1: So if you are going to be the president's nominee,
Speaker 1: you've got to be willing to go through the vetting process,
Speaker 1: fill out all the forms and paperwork for nothing, you know,
Speaker 1: for for for six months of being beaten about the
Speaker 1: head and shoulders in Washington, and you get nothing at
Speaker 1: the end of it. Well, except that it could also
Speaker 1: work in the opposite direction, Mike. That is. Uh, first
Speaker 1: of all, your your your stature as a as a
Speaker 1: judge will rise immediately because you've been nominated to the
Speaker 1: Supreme Court, whether or not you actually get it, and
Speaker 1: especially if there's no vote against you, it's just no vote. Um,
Speaker 1: there's not a whole lot of negative about it. But second,
Speaker 1: there is some expectation that if a Democrat gets elected
Speaker 1: to the White House, whoever the president nominates for, whoever
Speaker 1: President Obama nominates this year, might simply get renominated next year,
Speaker 1: especially if there's a Democratic controls that well. It one
Speaker 1: assumes though that whomever Bernie Sanders would nominate would I mean,
Speaker 1: he would look for someone who's farther to the left
Speaker 1: than Obama would pick. Not necessarily, not necessarily. And then
Speaker 1: in fact, if you listen to the Republicans in Congress,
Speaker 1: that's absolutely not gonna happen. But this just goes back
Speaker 1: to something we talked about earlier is a really interesting
Speaker 1: Republican versus Republican fight. Here. You've got Republican conservative groups,
Speaker 1: ultra conservative groups demanding that there be no hearings whatsoever.
Speaker 1: You've got people like like Chuck Grassley, Senator from Iowa, UM,
Speaker 1: saying we're gonna have hearings, UM. And so this is
Speaker 1: this is an he's a Republican big fights going on, UM,
Speaker 1: and the Democrats need to sit back and watching Republicans,
Speaker 1: you know, uh, you know self destroy themselves on a
Speaker 1: Friday question if we can, you have given us wonderful
Speaker 1: perspective on a broken legislature, inflative process, your expertise of
Speaker 1: a broken fiscal process from a distance, do you suggest
Speaker 1: we have a broken judicial progress? My take as an amateur,
Speaker 1: it's one of the few things that happens to work
Speaker 1: well whenever anybody's debate on it. Well we're not talking
Speaker 1: about the judicial process. That is, the decision by which
Speaker 1: the process by which they make decisions, but the process
Speaker 1: by which they select and confirmed judges clearly is in trouble. Um.
Speaker 1: No matter how qualified somebody might be, it's it's not
Speaker 1: clear that a brandis bankfootter could get not get elect
Speaker 1: get confirmed. Okay, I've heard that before. Would you suggest
Speaker 1: that this is an important decision tree for people voting
Speaker 1: in key states in November? Absolutely? In fact, do you
Speaker 1: think they're going to vote based on judicial decisions? No?
Speaker 1: I think well some will in order because on on
Speaker 1: everything from abortion to planned parented to a variety of
Speaker 1: things like that. The courts with with a dysfunctional congress,
Speaker 1: the courts have become the battleground in a lot of ways. Um,
Speaker 1: But what they should be voting on is the process
Speaker 1: by which the judges are confirmed. Can I can I
Speaker 1: bring it back to economics finance investment, Mike of what
Speaker 1: a novel concept. Let's review again for our audience and
Speaker 1: frankly for me, the importance of the plug ins of
Speaker 1: g d P in our debt process. They're critical. We
Speaker 1: all know that, but right now there's massive uncertainty about
Speaker 1: where the terminal long term five year tenure value is
Speaker 1: of g d P. Have you ever seen it like this? No,
Speaker 1: I never have, And I've also never seen the various
Speaker 1: organizations that do do forecasting be as unsure about what
Speaker 1: to do. The CBO has been great about it. I
Speaker 1: mean they've been very open about it. I think they have,
Speaker 1: I mean, very open, very transparent. But don't forget, you've
Speaker 1: got a lot of pressure from Congress coming from on
Speaker 1: dynamic scoring and those types of things and what it
Speaker 1: actually means for the economy. Um So, there's a lot
Speaker 1: of uncertainty, and there's a lot of disconnect between everything
Speaker 1: from g A O to CBO to l m B
Speaker 1: and everybody in between. Um So, it's it's it's and
Speaker 1: and you know, they're not simply taking what Wall Street
Speaker 1: is doing, but today, I mean that they they're coming
Speaker 1: up with their own. Doesn't matter if the numbers two
Speaker 1: point two percent versus a historic three point two percent
Speaker 1: over over a ten year period in our budget projections,
Speaker 1: it makes a huge, a huge difference. I mean, it's
Speaker 1: the difference between demands for deficit reduction or not. Hundreds
Speaker 1: of billions of dollars of delta over ten years, so easy, easy,
Speaker 1: and and and even it's going to be more as
Speaker 1: we get further to the out years. You okay, over there, No,
Speaker 1: I'm listening to Bronco's withdrawal. No, no, no it spring
Speaker 1: training has started. We're we're getting all excited. Actually, I'm
Speaker 1: reading some headlines here. Go back to what we were
Speaker 1: talking about very early in our interviews. Stand about how
Speaker 1: people have been trashing the US government and how bad
Speaker 1: things are the candidates out. They're voting in Uganda for
Speaker 1: for president Amy. This is a general election, and the
Speaker 1: incumbent President, Lucia Any has sixty three percent of the vote,
Speaker 1: the opposition candidate has thirty three percent of the vote,
Speaker 1: and the governed and has decided to storm the headquarters
Speaker 1: of the opposition candidate and arrest him. The US embassy
Speaker 1: there has uh strongly condemned this and is urging citizens
Speaker 1: to stay off the streets in the capital of Kampala. Well,
Speaker 1: we don't have that here. As bad as things are,
Speaker 1: let's keep things in perspective. There's a there's a pony
Speaker 1: in there somewhere here. Yes, I mean this is happening
Speaker 1: right now in another country. They're having a presidential election
Speaker 1: and they're arresting the opposition candidate. I mean, for all
Speaker 1: it's bad about the US government in etcetera. This has
Speaker 1: been a great There's a difference between a Monday through
Speaker 1: Thursday stand and a Friday stand. A Friday stand is
Speaker 1: more reflective, more thoughtful. Come back Monday, grizzled in cynic
Speaker 1: it'll happen, same calendar with Corvis MSL group, And as
Speaker 1: you all know, it has given us incredibly trenchion and
Speaker 1: oftentimes accurate perspective on our deficit and debt hysteria. Actually,
Speaker 1: there's some real weight to in seriousness. I do urge
Speaker 1: you to read the executive summaries at the Congressional Budget Office.
Speaker 1: They're a great way to start UH an intelligent discussion
Speaker 1: of where we're going with our national bills, where we're
Speaker 1: going with the tape. As an improvement, Futures flat down
Speaker 1: to negative nine, I'm gonna call that off the John
Speaker 1: Deer shock. Maybe Brussels and Cameron some of that as well,
Speaker 1: and we had a nice recovery on a correlated tape
Speaker 1: in the last twenty or more minutes. Futures negative four
Speaker 1: now features negative thirty oil oil thirty point zero one
Speaker 1: is up thirty cents thirty point three zero BRETU thirty
Speaker 1: three eight eight Bonus Round Friday Bonus Round. Another hour,
Speaker 1: Another two hours of Blueberg surveillance,