WEBVTT - 7am-8am: Khan & Collender 0:00:03.440 --> 0:00:06.920 This is Bloomberg surveillance. What I think the markets are 0:00:06.920 --> 0:00:09.119 doing is adjusting to the fact that things are going 0:00:09.160 --> 0:00:11.240 to be lower longer. Interest rates is going to stay 0:00:11.360 --> 0:00:15.160 lower longer than people anticipate. Low inflation is very good 0:00:15.160 --> 0:00:17.400 for facts that has proven to be over the last 0:00:17.480 --> 0:00:20.840 fifty plus year. The biggest banks are still in my judgment, 0:00:20.880 --> 0:00:23.320 too big to fail, and if you had multiple banks 0:00:23.360 --> 0:00:25.280 run into trouble at the same time, they would still 0:00:25.280 --> 0:00:28.560 get bailed out. Bloomberg Surveillance your link to the world 0:00:28.560 --> 0:00:33.880 of economics, finance and investment on Bloomberg Radio. Good morning, 0:00:33.920 --> 0:00:36.640 I Michael McKee. It is seven am on Wall Street. 0:00:36.720 --> 0:00:40.920 One pm in Brussels, where David Cameron is still negotiating 0:00:41.000 --> 0:00:43.279 on an anti Brexit deal. Will get an update from 0:00:43.360 --> 0:00:47.000 Chatham House today. Here in the US, the political campaign 0:00:47.040 --> 0:00:51.000 gets no more enlightening. In fact, it gets more complicated. 0:00:51.040 --> 0:00:53.120 Stan collandar will be along in a bit and this 0:00:53.640 --> 0:00:57.160 you will want to pay attention to. PwC Energy industry 0:00:57.160 --> 0:01:01.360 analysts read Morrison on the outlook for industry bankruptcies ahead. 0:01:01.360 --> 0:01:04.920 We're getting closer to the time when the bank's reset 0:01:04.959 --> 0:01:06.960 the loans and some people aren't going to be able 0:01:07.000 --> 0:01:10.679 to pay. Speaking of energy and oil, oil prices are 0:01:10.720 --> 0:01:14.280 lower this morning. West Texas thirty seventeen is down almost 0:01:14.280 --> 0:01:16.640 two percent. It's a one point seven percent decline for 0:01:16.800 --> 0:01:20.600 brand thirty three. And with oil down, you know where 0:01:20.640 --> 0:01:24.160 stocks are. The stock six hundred is off by four 0:01:24.200 --> 0:01:27.360 points now one percent, The decks down a hundred and 0:01:27.560 --> 0:01:31.759 five one point one percent. The foot seas off thirty nine. 0:01:32.080 --> 0:01:34.520 That's seven tenths. But we'll give them a little bit 0:01:34.520 --> 0:01:37.160 of a break on the oil question because they're still 0:01:37.200 --> 0:01:40.240 uncertainty in England about what's going on with Brexit UH. 0:01:40.280 --> 0:01:44.160 The pound five is lower right now here. In the US, 0:01:44.280 --> 0:01:49.640 futures significantly lower following yesterday's uh slight sell off s 0:01:49.680 --> 0:01:52.480 ANDP futures down nine points half a percent a half 0:01:52.480 --> 0:01:54.680 percent to clide for DOWBT even in futures seventy four 0:01:54.720 --> 0:01:58.120 points and NASDAC features are down twenty two that's half 0:01:58.240 --> 0:02:01.320 eight percent as well. The money seems to be going 0:02:01.320 --> 0:02:06.560 into the yen yen stronger today one eighty two. Albonix 0:02:07.600 --> 0:02:10.160 suffering not going into the year. Y're a one eleven 0:02:10.240 --> 0:02:12.640 O seven is flat on the day. It does seem 0:02:12.680 --> 0:02:14.720 to be going into bonds, though ten year note yield 0:02:15.320 --> 0:02:18.959 is down to one point seven two one eighteen for 0:02:19.080 --> 0:02:22.240 your five year and the two year at sixte basis points. 0:02:22.240 --> 0:02:25.680 The German two year now down to a negative fifty 0:02:25.720 --> 0:02:28.920 four basis points. So you can see what is happening. 0:02:29.000 --> 0:02:35.280 Oil is lower, but industrial metals are higher today. I 0:02:35.360 --> 0:02:38.880 hadn't noticed this until somebody pointed it out to me. 0:02:39.440 --> 0:02:41.960 Um I mentioned it because you may not realize that 0:02:42.000 --> 0:02:45.960 in all the gloom, commodities overall are not doing what 0:02:46.040 --> 0:02:49.959 you might think. The Bloomberg Commodity Index is up more 0:02:50.000 --> 0:02:54.160 than three percent over the last thirty days. Hamsa Khan's 0:02:54.200 --> 0:02:58.240 head of Commodities strategy for I n G. He joins us, Now, 0:02:58.680 --> 0:03:03.040 uh we, I mean the story was that commodities were 0:03:03.080 --> 0:03:06.240 in this never ending slump and dragging the global economy 0:03:06.280 --> 0:03:08.840 down with them, and it was being led by oil. 0:03:08.880 --> 0:03:14.240 And oil is volatile, but it's still in arrange. But 0:03:14.320 --> 0:03:17.959 the rest of the commodities world seems to be flattening out. 0:03:18.000 --> 0:03:21.799 Have we put in a bottom homes Michael means you're 0:03:21.800 --> 0:03:26.480 having me absolutely. We're seeing the influence of the pb 0:03:26.600 --> 0:03:28.560 O C and the ECV stepping in and saying their 0:03:28.560 --> 0:03:32.040 supporting markets, improving the outlook for industrial medals in China, 0:03:32.639 --> 0:03:35.920 and we're seeing that reflected in copper prices and U prices. 0:03:35.920 --> 0:03:39.119 Oil still has something of the hangover, due in part 0:03:39.160 --> 0:03:42.520 to the big building stories that we saw yesterday, due 0:03:42.520 --> 0:03:47.280 to the huge inventory levels around the world, and due 0:03:47.280 --> 0:03:51.200 to the Saudi rush of Venezuela, Iran and Iraq talk. 0:03:51.320 --> 0:03:54.119 So I think we're now moving into a phase where, yes, 0:03:54.160 --> 0:03:57.000 there could still be weakness for specific commodities, but as 0:03:57.000 --> 0:03:59.040 we looked at the broader picture for the commodity conflicts 0:03:59.080 --> 0:04:02.600 as a whole and the economies as a whole moving 0:04:02.600 --> 0:04:04.600 at second half during sixteen, there seems to be more 0:04:04.760 --> 0:04:07.119 for the upside of there is on the downside. Let's 0:04:07.160 --> 0:04:08.920 take a well out of the question for a moment, 0:04:08.960 --> 0:04:12.680 because we talk about it infinitem UH, and ask what 0:04:13.000 --> 0:04:16.400 other commodities are seeing action at this point. I when 0:04:16.600 --> 0:04:19.200 when you look at an economy from an economic point 0:04:19.200 --> 0:04:20.919 of view, I always go to copper, and I was 0:04:20.960 --> 0:04:25.640 surprised to see that copper is generally strong right now. 0:04:26.440 --> 0:04:29.480 Not strong, I don't want to make that go too far, 0:04:29.560 --> 0:04:34.000 but has flattened out and is up a little bit. Yeah. Absolutely, 0:04:34.160 --> 0:04:38.200 I think it's um it's an indicative of the huge 0:04:38.240 --> 0:04:40.520 sell off that we've seen in the last two years 0:04:40.520 --> 0:04:43.640 that we can see prices for copper creating at the 0:04:43.760 --> 0:04:47.240 four a half thousand level and still consider that bullish. 0:04:47.320 --> 0:04:50.000 But I think people are now looking at the level 0:04:50.120 --> 0:04:53.279 of cast production costs. They're saying before is beginning to 0:04:53.279 --> 0:04:56.279 be established because we were simply running out of the 0:04:56.320 --> 0:04:59.840 ability to mine at tour levels, whether that's your high 0:05:00.080 --> 0:05:05.880 quality um box side or your copper producers simply cannot 0:05:05.960 --> 0:05:09.520 provide at card price levels. And that sets up a 0:05:09.560 --> 0:05:12.080 supercycle in the future. And if you're a trader, you're 0:05:12.080 --> 0:05:13.799 a smart guy. Do you want to wait until prices 0:05:13.800 --> 0:05:17.360 are significantly higher into dozen septeen mate and then put 0:05:17.360 --> 0:05:19.040 in your long position or do you want to start 0:05:19.040 --> 0:05:21.320 positioning yourself earlier? And that's I think what we're seeing 0:05:21.320 --> 0:05:23.719 in the industrial battle. I have to stop you there 0:05:23.720 --> 0:05:26.240 and ask you what you said the words supercycle. There's 0:05:26.240 --> 0:05:31.200 a difference between going up, even a cyclical rise, and 0:05:31.440 --> 0:05:34.920 a supercycle, which you know we think of as lasting 0:05:35.000 --> 0:05:40.640 years or decades. Right, So if we're if we're not 0:05:40.880 --> 0:05:44.400 investing in infrastructure today, it can take us much longer 0:05:44.480 --> 0:05:46.680 than we expect to bring production dot on line. The 0:05:46.720 --> 0:05:49.400 example here would be the US all industry in the 0:05:49.440 --> 0:05:52.360 eighties and the nineties, when we shut in production due 0:05:52.360 --> 0:05:55.520 to very low prices in the eighties. When we try 0:05:55.600 --> 0:05:57.800 to bring those US all fields back online and the 0:05:57.880 --> 0:06:00.839 nineties and prices began to go higher, discovered we weren't 0:06:00.839 --> 0:06:05.640 able to and that set up the two thousand commodity boom. 0:06:06.400 --> 0:06:08.159 So we were in the risk of a similar situation 0:06:08.240 --> 0:06:10.440 forming in the future. Ham's a Cohn with us with 0:06:10.839 --> 0:06:13.200 I n G. As we look at commodity marks. As 0:06:13.240 --> 0:06:16.480 Michael said, a contrary to the gloom, Uh, some of 0:06:16.520 --> 0:06:19.719 the commodities are actually had a pretty remarkable week. Chicago 0:06:19.800 --> 0:06:23.160 copper two oh seven fifty, of course, breaching two d 0:06:23.760 --> 0:06:27.520 um a while back. Good morning everyone, Bloomberg Surveillance this 0:06:27.720 --> 0:06:30.919 Friday brought you by Investco. Don't settle for average in 0:06:30.960 --> 0:06:34.720 your portfolio to invest go the right approach means investing 0:06:34.720 --> 0:06:38.360 with high conviction. Find out more at investco dot com 0:06:38.480 --> 0:06:42.599 slash high conviction. Uh, Michael, what I would see on 0:06:42.640 --> 0:06:44.480 the screen as a German two year I mean all 0:06:44.520 --> 0:06:47.400 the yields are in as they were yesterday. On actually 0:06:47.400 --> 0:06:50.040 the US two year breaking down right now ever so slightly, 0:06:50.200 --> 0:06:52.880 but the German two years really beginning to make about 0:06:53.320 --> 0:06:57.839 back towards February eleven. Lows. We're not there yet, but 0:06:58.000 --> 0:07:00.680 nevertheless there it is. Well, there's a lot of nervousness, 0:07:00.680 --> 0:07:03.680 everybody says about what's going on in Brussels. Yeah, and 0:07:03.760 --> 0:07:05.880 Caroline Hy'd been very clear, we really don't know when 0:07:05.880 --> 0:07:09.680 the meeting is. They're trying to give him agreement. Yeah, 0:07:10.040 --> 0:07:12.520 we'll keep everybody informed on it. I's a kind with 0:07:12.600 --> 0:07:15.240 us again, as we look at COMI I see a 0:07:15.280 --> 0:07:18.240 soggy nous in oil. Stephen Short with us a short 0:07:18.360 --> 0:07:23.520 report earlier this week, remarkably ambivalent about which way it goes. 0:07:23.800 --> 0:07:28.200 Do you have a conviction on oil? I have a 0:07:28.320 --> 0:07:32.000 very strong conviction that if demand goes higher or persons 0:07:32.040 --> 0:07:35.200 will go higher, because we talked about over supplying the market, 0:07:35.200 --> 0:07:36.680 and we talked about a lot of battle if you 0:07:36.720 --> 0:07:38.920 talk about a lot of stories, and in the short term, 0:07:38.960 --> 0:07:41.320 absolutely that's going to be to for instance, this all 0:07:41.320 --> 0:07:43.680 off we saw after view report. But in the long run, 0:07:43.680 --> 0:07:45.800 we're talking to three months six months if the US 0:07:45.840 --> 0:07:49.400 equities recover, if the Asian markets recover all is going higher, 0:07:49.440 --> 0:07:54.080 and I can't be more emphatic about that. What about 0:07:55.360 --> 0:07:59.560 beyond um oil and gas, because they seem to be 0:08:00.040 --> 0:08:04.920 writing on supply and demand as opposed to UM demand 0:08:04.960 --> 0:08:08.280 only in some of the other commodities UM. When you 0:08:08.320 --> 0:08:11.960 look at industrial metals and I'm talking lead, zinc, UH, 0:08:12.040 --> 0:08:14.520 that sort of thing, UH is there is there a 0:08:14.600 --> 0:08:17.840 feeling that the markets are in balance and we're just 0:08:17.880 --> 0:08:22.160 looking for a renewal of demand brought about by these 0:08:22.200 --> 0:08:25.080 central banks, or is there a big overhang there as 0:08:25.080 --> 0:08:29.880 well that's going to keep prices depressed for a long time, right, 0:08:29.960 --> 0:08:33.400 So that will depend on on the on the specific medals. So, 0:08:33.480 --> 0:08:35.880 for for instance, with iron or I think everyone's expecting 0:08:36.200 --> 0:08:39.640 a large amount of supply to remain depressed prices, Whereas 0:08:39.679 --> 0:08:41.400 when it comes to aluminum, the rest of the world 0:08:41.400 --> 0:08:45.439 outside of China isn't something of a deficit. So there 0:08:45.480 --> 0:08:49.160 are opportunities for UH imbalances and supply and demand. And 0:08:50.200 --> 0:08:52.800 I think what people sometimes overlook is that yes, we 0:08:52.840 --> 0:08:54.640 have very large inventories, but if you look at the 0:08:54.679 --> 0:08:58.240 absolute consumption numbers, whether that's the for your copper or 0:08:58.280 --> 0:09:00.920 for your little we can words very quickly, and we 0:09:00.960 --> 0:09:03.400 have been If you look at the ELM inventory levels, 0:09:03.760 --> 0:09:07.320 levels the metal, they've all been trending lower. You're in 0:09:07.360 --> 0:09:12.120 the trenches on this. How do you respond when somebody 0:09:12.160 --> 0:09:15.760 away from your strategy bent says we're waiting for corporate 0:09:15.760 --> 0:09:19.680 balance sheets to clear. Are we seeing national and corporate 0:09:19.679 --> 0:09:27.080 balance sheets clearing bad will in mining? Is that process occurring? Absolutely? So? 0:09:27.120 --> 0:09:29.280 I was, I was in I was in Houston talking 0:09:29.320 --> 0:09:32.120 to someone to be all on gas producers last week 0:09:32.160 --> 0:09:34.520 I was, I was in Singapore talking to the to 0:09:34.640 --> 0:09:37.680 the iron norm producers, and we're seeing a lot of 0:09:37.720 --> 0:09:40.360 companies stepping in to figure out. I think that their 0:09:40.360 --> 0:09:42.000 backs to the wall. There's smart people to are figuring 0:09:42.000 --> 0:09:45.160 out how can we survive in a twenty dollar for 0:09:45.240 --> 0:09:50.040 vowel environment Hams to thank you so much, ham to 0:09:50.160 --> 0:09:54.679 con with iron U g uh with us, harm to 0:09:54.760 --> 0:09:57.840 con thank you again so much. On Mike I, I really, 0:09:58.040 --> 0:10:00.120 you know, with commodities you lose sight because there's so 0:10:00.200 --> 0:10:04.920 many to follow. Look at natural gas one point eight 0:10:05.360 --> 0:10:10.959 four six really legging down this week towards Lowe's scene 0:10:11.040 --> 0:10:16.040 in December. Well yeah, I mean, I mean, obviously that's it, 0:10:16.240 --> 0:10:20.800 But the fact is I can't say enough, you know, Caroline, 0:10:20.840 --> 0:10:24.600 I use the phrase messy the indeterminate nature of market 0:10:24.640 --> 0:10:27.960 action this week, Mike, I haven't seen in ages like you. 0:10:28.000 --> 0:10:31.480 Really don't even know where different asset classes are going 0:10:31.520 --> 0:10:33.920 in their correlations as well, and they may even move 0:10:34.000 --> 0:10:36.760 through the morning. That John Deere headlines, I think really 0:10:36.760 --> 0:10:40.440 put a weight. Uh you know, we're flat green on 0:10:40.440 --> 0:10:44.200 the screen. Actually right now futures negative nine, Dow futures 0:10:44.240 --> 0:10:53.400 negative seventies. John Deere sharply adjusted their view forward this 0:10:53.480 --> 0:10:55.880 hour of surveillance. Spot you by mansdo white planes visit 0:10:55.920 --> 0:10:59.040 masdo white planes dot com? Here's Michael bar with headlines. 0:10:59.160 --> 0:11:02.040 My time. We have to developing news. American war planes 0:11:02.240 --> 0:11:05.800 have struck multiple targets in Libya overnight, hitting what was 0:11:05.840 --> 0:11:10.199 apparently an Islamic state training camp and a senior extremist leader. 0:11:10.600 --> 0:11:13.360 That is according to a US official who did not 0:11:13.520 --> 0:11:17.080 want to be identified. Supreme Court officials say Justice Anton 0:11:17.120 --> 0:11:20.040 and Scalia's casket will arrive this morning to be carried 0:11:20.160 --> 0:11:23.000 up the court steps to the Great Hall, where it 0:11:23.080 --> 0:11:26.720 will lie in repose. Thousands of mourners, including President of Baba, 0:11:27.040 --> 0:11:30.760 members of Congress, former Justices and tourists will pay their 0:11:30.800 --> 0:11:34.079 respects to one of the court's most influential members. Funeral 0:11:34.120 --> 0:11:37.120 mass for Scalia will be held tomorrow. The lawyer for 0:11:37.200 --> 0:11:40.160 a Texas teenager who used an affluenza defense and a 0:11:40.200 --> 0:11:43.640 fatal drunken driving wreck has said he will not challenge 0:11:43.640 --> 0:11:46.400 a transfer of the case to adult court. Eighteen year 0:11:46.400 --> 0:11:48.760 old Ethan Couches due to appear in court today for 0:11:48.920 --> 0:11:51.880 hearing on the question. Global News twenty four hours a day, 0:11:51.920 --> 0:11:56.320 powered by our journalists him Michael Barr to Michael, thanks 0:11:56.320 --> 0:11:59.400 so much, West Texas thirty dollars eleven cents wait to 0:11:59.480 --> 0:12:01.640 the day, but not through to a twenty nine handle 0:12:02.400 --> 0:12:07.559 yet from New York of Bloomberg Surveillance. Bloomberg Surveillance brought 0:12:07.600 --> 0:12:09.840 to buy your Tri State BMW centers. Visit the online 0:12:09.840 --> 0:12:12.240 at tri State BMW dot com. At BMW they make 0:12:12.280 --> 0:12:23.560 only one thing, the ultimate driving machine. Global Business News 0:12:23.600 --> 0:12:26.560 twenty four hours a day at Bloomberg dot Com, the 0:12:26.640 --> 0:12:29.760 radio plus mobile app, and on your radio. This is 0:12:29.760 --> 0:12:32.959 a Bloomberg Business Flash and I'm Kerra in Moscow. This 0:12:33.120 --> 0:12:35.640 updates brought to you by c I T. From transportation 0:12:35.640 --> 0:12:39.760 to healthcare to manufacturing, c i T offers commercial lending, leasing, 0:12:39.800 --> 0:12:43.559 and treasury management services for small and middle market businesses. 0:12:43.640 --> 0:12:46.160 Learn more at c I T dot com put Knowledge 0:12:46.200 --> 0:12:49.360 to Work. Deer In Company down almost two percent this morning, 0:12:49.400 --> 0:12:52.920 the world's largest agricultural equipment maker, cutting its fiscal full 0:12:53.000 --> 0:12:56.120 year profit and sales forecast. I mean a worsening outlook 0:12:56.160 --> 0:12:59.440 for farmers as they face declining incomes. US DOT Index 0:12:59.440 --> 0:13:02.559 futures me while lower along with oil prices, smp E 0:13:02.600 --> 0:13:05.640 Many futures down seven points, now E Many futures down 0:13:05.679 --> 0:13:08.920 sixty four, nazdak E Many futures down eighteen. DAX in 0:13:08.960 --> 0:13:11.880 Germany's down nine tenths per cent, tenure treasury of four 0:13:11.920 --> 0:13:14.960 thirty seconds, the yeld one point seven two percent, nom 0:13:15.040 --> 0:13:17.400 X screwed oil down two percent or sixty cents to 0:13:17.480 --> 0:13:20.640 thirty dollars seventeen cents of arrol Comax Gold up seven 0:13:20.640 --> 0:13:23.199 tenths percent or eight dollars ten cents to twelve thirty 0:13:23.200 --> 0:13:26.200 four or forty ounce. The euro and dollar eleven twelve, 0:13:26.240 --> 0:13:29.199 the N one twelve point eight three. That's a Bloomberg 0:13:29.200 --> 0:13:33.959 business flash. Tom and Mike, thank you, Karen Well. If 0:13:34.000 --> 0:13:37.920 if anything, it's almost hard to believe that the presidential 0:13:38.000 --> 0:13:41.360 race could get more toxic, but it did yesterday with 0:13:41.440 --> 0:13:46.600 the Pope getting involved at Donald Trump, etcetera. Uh, anything 0:13:46.600 --> 0:13:50.560 but edifying. One of the things that is now becoming 0:13:50.559 --> 0:13:55.560 clear is that the collateral damage out of all this 0:13:55.760 --> 0:13:59.200 is going to be trust. What trust is remaining in Washington? 0:13:59.360 --> 0:14:02.520 And our government has all the candidates run around talking 0:14:02.520 --> 0:14:07.160 about how we have a terrible, terrible, terrible government in Washington. 0:14:07.600 --> 0:14:11.120 Stan Colliner has to deal with that government on a 0:14:11.200 --> 0:14:14.480 daily basis. He is an executive vice president National director 0:14:14.800 --> 0:14:19.160 of Financial Communications for the MSL Group. And uh stand, 0:14:19.320 --> 0:14:21.640 I'm just wondering what real estate prices are like in 0:14:21.720 --> 0:14:24.200 Washington these days. I mean, is it like, you know, 0:14:24.560 --> 0:14:27.000 nobody's gonna be able to sell their house because nobody 0:14:27.080 --> 0:14:30.840 wants to go and live in toxic Washington. Well, usually 0:14:30.960 --> 0:14:34.880 what happens. It's funny you should ask. Um. The real 0:14:34.960 --> 0:14:37.640 estate prices in the Washington area completely depended on the 0:14:37.640 --> 0:14:41.920 election cycle, and they vary depending upon whether a Democrat 0:14:42.000 --> 0:14:44.880 or a Republican is more likely to get elected. Republicans 0:14:44.920 --> 0:14:48.600 tend to buy in the suburbs. Um So, given that 0:14:48.680 --> 0:14:50.880 everything is on hold at the moment, because things are 0:14:50.920 --> 0:14:54.560 so crazy or couldn't get much crazier. We think, Uh, 0:14:54.720 --> 0:14:57.160 the real estate is not moving as quickly in Washington 0:14:57.160 --> 0:14:58.920 as he used to. You just said a funny saying, 0:14:59.000 --> 0:15:02.440 couldn't get much crazier, And then that's what we said 0:15:02.480 --> 0:15:06.680 last week. And then antonin Scalia dies and now it's crazier. Yeah, 0:15:06.760 --> 0:15:08.760 and now the Pope of course decided that he was 0:15:08.840 --> 0:15:12.840 part of the US election process. Um, I wasn't his fault. 0:15:12.840 --> 0:15:15.240 It was a reporter's fault. But anyway, but but still, 0:15:15.400 --> 0:15:19.520 um uh, these are things and you should expect more 0:15:19.640 --> 0:15:22.200 unexpected things. And this is the time in the election 0:15:22.200 --> 0:15:25.240 that candidates can't plan for everything happening. And what we 0:15:25.320 --> 0:15:27.160 used to do in a general election call in October 0:15:27.240 --> 0:15:30.880 surprise now is becoming a February surprise and March surprise, etcetera, etcetera. 0:15:31.320 --> 0:15:33.960 We can't do anything about what the candidates are doing 0:15:33.960 --> 0:15:36.320 and saying out there, but we do have to worry 0:15:36.320 --> 0:15:40.040 about what is actually happening the companies and investors who 0:15:40.080 --> 0:15:42.640 are listening to us. Um, I want to know what 0:15:42.960 --> 0:15:46.200 is going to happen, what is happening in Washington? And 0:15:46.640 --> 0:15:50.720 I guess uh from your notes nothing at this point, 0:15:50.800 --> 0:15:53.360 it's happening anymore because of what's going on. Well, not 0:15:53.400 --> 0:15:56.120 only is nothing happening, but you should expect the market 0:15:56.160 --> 0:15:58.840 should expect that Washington is basically going to be dysfunctional 0:15:58.880 --> 0:16:01.080 for the rest of the year. Maybe next year too, 0:16:01.080 --> 0:16:03.680 But let's just deal with this year. Let's let's jump 0:16:03.720 --> 0:16:06.040 into that. I think it's with your we should explain 0:16:06.120 --> 0:16:09.760 your experience. You spent years up on Capitol Hill with 0:16:09.880 --> 0:16:13.920 finance and fiscal and budget matters. Is an outsider to 0:16:14.040 --> 0:16:18.640 the judicial process. What are you watching for in the 0:16:18.720 --> 0:16:21.360 coming weeks and months. Well, the first thing is you 0:16:21.360 --> 0:16:24.840 would expect the Democrats to uh go after Mitch McConnell 0:16:24.880 --> 0:16:27.440 in a variety of ways using the legislation, the legislative 0:16:27.480 --> 0:16:31.080 processes they they can. Basically because of his comments of 0:16:31.720 --> 0:16:35.040 post the Justice Scalis death, Uh, they'll slow down the 0:16:35.040 --> 0:16:37.320 appropriations process to the point where not much is going 0:16:37.360 --> 0:16:39.360 to happen until the very end of the fiscal year, 0:16:40.040 --> 0:16:42.040 uh or the beginning of the next year. And that's 0:16:42.040 --> 0:16:44.760 exactly the opposite of what he expected. But also things 0:16:44.800 --> 0:16:48.000 like tax reform not going anywhere. Um. And the biggest 0:16:48.040 --> 0:16:51.280 thing you had on on yesterday Larry Larry. Yes, I'm 0:16:51.320 --> 0:16:53.880 just saying we need fiscal policy. There is gonna be 0:16:53.960 --> 0:16:56.840 no fiscal policy. Whatever happens on the budget will happen 0:16:56.880 --> 0:17:01.920 by accident, not intentionally. Well, if, um, if we're going 0:17:01.960 --> 0:17:05.200 to stop everything, is that necessarily a bad thing. It's 0:17:05.200 --> 0:17:09.160 been argued for years that the best scenario for Wall 0:17:09.200 --> 0:17:13.000 Street is that Washington is be calmed because nothing negative 0:17:13.040 --> 0:17:17.280 happens and there's a certain certainty uh to policy. Well, 0:17:17.320 --> 0:17:19.200 that would be fine if the economy were doing well 0:17:19.200 --> 0:17:21.280 in the expectations where that it was going to continue 0:17:21.280 --> 0:17:24.480 to do well, but with the Fed having limited amounts 0:17:24.480 --> 0:17:28.520 of limited tools at its disposal, uh, and you would 0:17:28.560 --> 0:17:31.840 expect or you would the markets would help that Washington 0:17:31.840 --> 0:17:33.760 would be functioning better so that if they needed to 0:17:33.800 --> 0:17:37.920 do something, they could. Um. That's what that's the real 0:17:37.960 --> 0:17:41.919 fallacy about. Let's just have Washington do nothing first of all, Um, 0:17:42.000 --> 0:17:45.680 that's only good when you don't need Washington to do something. 0:17:45.680 --> 0:17:46.920 And at this point, there are a lot of folks 0:17:46.920 --> 0:17:48.280 to say there are some things that should be done, 0:17:48.280 --> 0:17:50.479 some sort of stimulus plan at tax cut something like 0:17:50.520 --> 0:17:54.359 that to keep the economy going. But um, you remember, 0:17:54.400 --> 0:17:57.520 the big thing is expectation here and right now, there's 0:17:57.560 --> 0:17:59.679 no way you can expect what Washington is doing with 0:17:59.720 --> 0:18:03.080 any gree certainty or confidence. But if you're a if 0:18:03.119 --> 0:18:06.200 you're a serious investor, and you're following all this, you're 0:18:06.240 --> 0:18:10.000 not expecting any kind of even absent the poisonous atmosphere 0:18:10.040 --> 0:18:12.720 we've got, you're not expecting any kind of fiscal action. 0:18:12.800 --> 0:18:15.480 I mean, all the talk about Washington should do something is, 0:18:15.880 --> 0:18:18.080 as near as I can tell, from outside the belt Way, 0:18:18.119 --> 0:18:21.399 anybody in Washington actually saying, well, maybe it would be 0:18:21.400 --> 0:18:24.159 a good idea to pass something. Um, well, there are 0:18:24.160 --> 0:18:25.879 a lot of things that some people would like to pass, 0:18:26.359 --> 0:18:30.320 for example, international tax reform or corporate tax reform. Um 0:18:30.680 --> 0:18:32.840 there are things that people would like that's just not 0:18:32.880 --> 0:18:35.480 going to happen. And the question here is when could 0:18:35.480 --> 0:18:37.479 it happen? I mean, we're looking at is not just 0:18:37.560 --> 0:18:40.879 a uh freeze in place situation for the rest of 0:18:40.880 --> 0:18:42.960 this year, but possibly for the next couple of years 0:18:42.960 --> 0:18:46.199 as well, with the Senate maybe turning hands narrowly or 0:18:46.600 --> 0:18:48.520 you know, so not much gonna go on or where 0:18:48.560 --> 0:18:51.879 are we then, with with all of that background, quickly, here, 0:18:51.880 --> 0:18:56.399 where are we on sequest your so shutdown, and the 0:18:56.480 --> 0:18:58.879 rest of it is that all old news are those 0:18:58.880 --> 0:19:01.960 options that use study. Um they're options, but they're not 0:19:02.000 --> 0:19:04.879 They're very very less likely. It's very less likely, but 0:19:05.000 --> 0:19:06.960 very less likely. We don't get the shock at all, 0:19:07.480 --> 0:19:09.439 and and there's no debt sailing issue this year. At 0:19:09.880 --> 0:19:12.480 stan Colindar, we'll talk to him about the fiscal discussion. 0:19:12.480 --> 0:19:15.359 On the campaign trail, We've got to review what have 0:19:15.400 --> 0:19:17.920 we got Mike, South Carolina and Nevada for the Democrats 0:19:17.960 --> 0:19:20.840 this weekend for the Democrats and then the Democrats go 0:19:20.880 --> 0:19:22.600 back to South Carolina win a week for a week 0:19:22.640 --> 0:19:25.400 from sat and the Republicans go to Nevada on Tuesday. 0:19:25.480 --> 0:19:28.840 Go figure, what does stan Colendar here out on the 0:19:28.880 --> 0:19:31.760 campaign trail. Maybe it's different than Mike McKie and I 0:19:31.880 --> 0:19:34.600 here or don't here as well? To discuss that with 0:19:34.720 --> 0:19:39.119 Stanley Colendar of Corvus MSL Group Features to review or 0:19:39.240 --> 0:19:44.040 flat John Deere with a bombshell forecast week week forecast 0:19:44.119 --> 0:19:48.040 forward futures to tier eight, negative eight, Dow features negative 0:19:48.080 --> 0:19:51.359 sixty seven oil got down to thirty dollars and a 0:19:51.440 --> 0:19:56.600 penny looking for a twenty nine handle on West Texas Intermediate. 0:19:57.040 --> 0:19:58.919 It is a good Friday morning. We want you to 0:19:59.080 --> 0:20:02.560 stay with us, My McKee and Tom Key Bloomberg Surveillance. 0:20:05.800 --> 0:20:08.000 Bloomberg Surveillance is brought to you by your Mercedes Benz 0:20:08.000 --> 0:20:10.520 Tri State Dealer. When it comes to winter elements, put 0:20:10.520 --> 0:20:12.919 your best four wheels forward with Mercedes Benz Formatic All 0:20:12.960 --> 0:20:15.600 wheel Drive. Visit your Mercedes Benz Tri State dealer for 0:20:15.600 --> 0:20:25.960 a test drive today. Broadcasting live to New York, Gloomberg 0:20:26.000 --> 0:20:31.000 eleventh Rio to Washington, d C, Bloomberg to Boston, Bloomberg 0:20:31.040 --> 0:20:35.000 twelve onders to San Francisco, Bloomberg nine to the Country 0:20:35.160 --> 0:20:38.719 Series Exam Channel one ninety and around the globe. The 0:20:38.720 --> 0:20:43.360 Bloomberg Radio Plus happened Bloomberg dot Com. This is Bloomberg Surveillance. 0:20:44.440 --> 0:20:47.800 Good morning. I'm Michael McKee. Seven thirty on Wall Street 0:20:48.480 --> 0:20:51.520 t G I f A. Wall Street struggles to find 0:20:51.520 --> 0:20:54.600 a reason to go higher this morning, John Dear, Now 0:20:54.640 --> 0:20:56.439 it's called Deer in Company. Some of us are all 0:20:56.520 --> 0:21:00.480 enough to remember. John, the world's largest stagger culture maker, 0:21:00.520 --> 0:21:04.000 cutting its fiscal full year profit and sales forecast, worsening 0:21:04.000 --> 0:21:07.800 outlook for farmers these days. Deer shares down one point 0:21:07.880 --> 0:21:10.840 three on the good news side, shares of applied materials 0:21:10.880 --> 0:21:14.800 are up almost nine percent. The largest maker of the 0:21:14.840 --> 0:21:17.800 machines that produced computer chips predicted sales this quarter that 0:21:17.840 --> 0:21:22.240 could beat analysts estimates. Starwood Hotel CEO says that company 0:21:22.280 --> 0:21:24.840 maybe in talks to sell properties, including the St. Regis 0:21:24.880 --> 0:21:28.280 in New York, and City Group increased chief executive Mike 0:21:28.320 --> 0:21:32.760 Corbett's compensation. He made sixteen and a half million dollars 0:21:33.480 --> 0:21:35.920 last year. Now, let's check out with Michael Barr and 0:21:36.000 --> 0:21:38.960 yet the latest world and national headlines. MIKEL, Mike, thank 0:21:39.000 --> 0:21:41.840 you very much. A US officials says American war planes 0:21:41.880 --> 0:21:45.480 at multiple targets in Libya overnight. The officials says one 0:21:45.520 --> 0:21:48.480 of the targets hit was an Islamic State training camp 0:21:48.800 --> 0:21:52.159 and also a senior extremist leader was also hit. The 0:21:52.240 --> 0:21:55.639 official says at least thirty Islamic State recruits were killed. 0:21:56.040 --> 0:21:59.280 The casket carrying Supreme Court Justice Antonin Scali elbow Lyon 0:21:59.400 --> 0:22:02.560 propose at the Supreme Court thousands of mornings will pay 0:22:02.600 --> 0:22:05.440 their respects today a funeral mass where schooling it will 0:22:05.440 --> 0:22:08.200 take place tomorrow. The I R S is issuing a 0:22:08.240 --> 0:22:12.120 new Morning about email scams. Crooks are sending out more 0:22:12.160 --> 0:22:15.840 bogus links and fake websites than ever to try and 0:22:15.920 --> 0:22:19.959 get access to taxpayers personal data and bank account numbers. 0:22:20.240 --> 0:22:24.040 Senior i R spokesperson Terry Lemons tells us the messages 0:22:24.240 --> 0:22:27.080 look official, but they're not. If you year at tax 0:22:27.119 --> 0:22:30.240 time we see a real uptick in tax scams, but 0:22:30.400 --> 0:22:33.640 this year so far, we've seen a real surge of 0:22:33.720 --> 0:22:37.320 these email phishing incidents. Lemons says, if you do come 0:22:37.320 --> 0:22:40.680