1 00:00:03,200 --> 00:00:06,400 Speaker 1: This is Bloomberg Surveillance. Is there a little sign of 2 00:00:06,440 --> 00:00:10,000 Speaker 1: concern in the banking system in the Eurozone, Yes, but 3 00:00:10,080 --> 00:00:13,720 Speaker 1: it's still very very contained. Do US pursued a very 4 00:00:13,720 --> 00:00:18,239 Speaker 1: aggressive policy early on and chayoff several years later? You 5 00:00:18,360 --> 00:00:22,200 Speaker 1: have a fundamental problem of architecture, and that's why any 6 00:00:22,239 --> 00:00:26,040 Speaker 1: small issue is amplified immediately in the marketplace. S Bloomberg 7 00:00:26,120 --> 00:00:29,880 Speaker 1: Surveillance your link to the world of economics, finance and 8 00:00:30,000 --> 00:00:34,320 Speaker 1: investment on Bloomberg Radio. Good morning, I Michael McKay. It 9 00:00:34,400 --> 00:00:36,239 Speaker 1: is seven am on Wall Street. It looks like a 10 00:00:36,280 --> 00:00:38,240 Speaker 1: good day to pull the covers back over your head. 11 00:00:38,720 --> 00:00:42,200 Speaker 1: Jennet Yellen fails to calm investors nerves. Oil drops again 12 00:00:42,280 --> 00:00:45,360 Speaker 1: and there's a lot of red on the screen. Why 13 00:00:45,640 --> 00:00:49,800 Speaker 1: and what's next? On surveillance this morning? Some of it disappointing. 14 00:00:49,800 --> 00:00:53,440 Speaker 1: Earning Associateation L reporting earnings down thirty in the most 15 00:00:53,479 --> 00:00:56,760 Speaker 1: recent quarter. That adds to concern about European banks. European 16 00:00:56,840 --> 00:01:01,560 Speaker 1: indexes very read. The stock six d three point six percent. 17 00:01:01,640 --> 00:01:05,440 Speaker 1: That's eleven points on that index. The Docks one of 18 00:01:05,440 --> 00:01:08,560 Speaker 1: the worst performing indexes in the world so far this year, 19 00:01:08,600 --> 00:01:11,480 Speaker 1: down two point nine percent. Two hundred and fifty eight 20 00:01:11,520 --> 00:01:15,720 Speaker 1: points in the Across the English channel, the Footsie is 21 00:01:15,760 --> 00:01:18,440 Speaker 1: off a hundred and thirty eight points right now, two 22 00:01:18,480 --> 00:01:21,759 Speaker 1: and a half percent. Here in oh By the way, 23 00:01:21,800 --> 00:01:25,760 Speaker 1: Sweden's ricks bank tom cutting rates even more negative, negative 24 00:01:25,800 --> 00:01:29,520 Speaker 1: fifty basis points. They say they may intervene in currency 25 00:01:29,640 --> 00:01:33,240 Speaker 1: markets as well. We'll have to talk about that uh 26 00:01:33,760 --> 00:01:36,760 Speaker 1: a little bit later. The uh secy is down against 27 00:01:36,760 --> 00:01:39,759 Speaker 1: the Euro and the dollar though. Here in the US 28 00:01:39,840 --> 00:01:44,680 Speaker 1: equities following oil lower West Texas twenty six thirty four 29 00:01:44,920 --> 00:01:48,080 Speaker 1: down more than four percent, Brent crude thirty nine, down 30 00:01:48,400 --> 00:01:51,560 Speaker 1: one and three quarters per cent. Bob Sins writing in 31 00:01:51,640 --> 00:01:54,400 Speaker 1: from Amherst Pierpont this morning, saying maybe oil is headed 32 00:01:54,440 --> 00:01:56,680 Speaker 1: to capitulation. We can talk about why he thinks so 33 00:01:57,440 --> 00:02:00,000 Speaker 1: a little bit later on. As I mentioned, US futures 34 00:02:00,080 --> 00:02:02,880 Speaker 1: following all down, SMP features off forty three points. This 35 00:02:03,080 --> 00:02:06,440 Speaker 1: is SMP, This isn't Dow features. SMP features off forty 36 00:02:06,480 --> 00:02:09,520 Speaker 1: three points two point two percent. Down features down three 37 00:02:09,639 --> 00:02:13,200 Speaker 1: hundred and forty six points two point two percent. NASTAC 38 00:02:13,240 --> 00:02:16,880 Speaker 1: features the worst. They're off ninety eight points too and 39 00:02:16,960 --> 00:02:19,880 Speaker 1: a half percent. And I haven't even talked about bonds. 40 00:02:20,639 --> 00:02:23,799 Speaker 1: Bonds are falling, yields are are bonds are rising, Yields 41 00:02:23,800 --> 00:02:28,760 Speaker 1: falling one point five five for the tenure basis points, 42 00:02:28,800 --> 00:02:32,360 Speaker 1: below one percent for the five year, fifty nine basis 43 00:02:32,400 --> 00:02:35,040 Speaker 1: points for the two year two thousand thirteen levels, and 44 00:02:35,360 --> 00:02:40,640 Speaker 1: German and British bonds are at record lows this morning. 45 00:02:40,639 --> 00:02:42,960 Speaker 1: I think you continue with your terrific some I just 46 00:02:43,000 --> 00:02:46,400 Speaker 1: want to say, for global Wall Street listening that all 47 00:02:46,440 --> 00:02:49,600 Speaker 1: of this is massively quadratic. I just did a log 48 00:02:49,760 --> 00:02:55,560 Speaker 1: chart of Japanese yen intra day and it is not falling. 49 00:02:56,280 --> 00:03:02,400 Speaker 1: Plunging is media talk. It's just elerating the convexities that 50 00:03:02,520 --> 00:03:06,520 Speaker 1: we're seeing across all asset classes. Aren't like yesterday, Mike, 51 00:03:06,840 --> 00:03:09,160 Speaker 1: and aren't like a week ago. Well, that's a shameless 52 00:03:09,160 --> 00:03:12,000 Speaker 1: plug for the Bloomberg Radio Plus app because you'll send 53 00:03:12,040 --> 00:03:16,120 Speaker 1: that out to everybody who has one. Exactly what you're 54 00:03:16,160 --> 00:03:19,320 Speaker 1: talking about. Well, Billy is head of North American Economics 55 00:03:19,320 --> 00:03:22,560 Speaker 1: for City Group, and he is taking shelter here in 56 00:03:22,639 --> 00:03:25,919 Speaker 1: the sub basement of the Bloomberg World headquarters with us 57 00:03:26,240 --> 00:03:28,760 Speaker 1: as we closed the submarine door and try to keep 58 00:03:28,800 --> 00:03:31,880 Speaker 1: the world out. Yesterday, Janet Yellen went up to Capitol 59 00:03:31,919 --> 00:03:35,560 Speaker 1: Hill and said, things aren't that bad. Um is nobody listening? 60 00:03:35,840 --> 00:03:38,320 Speaker 1: Isn't it amazing Mike that when you actually look at 61 00:03:38,320 --> 00:03:40,800 Speaker 1: the real data, and Johnny Yellen was in fact pointing 62 00:03:40,800 --> 00:03:43,160 Speaker 1: to the employment data and she said, you know, things 63 00:03:43,160 --> 00:03:45,640 Speaker 1: are doing quite well, and yet the markets a panic 64 00:03:45,720 --> 00:03:48,440 Speaker 1: like crazy. There's not one person out there wants to 65 00:03:48,480 --> 00:03:51,200 Speaker 1: take on any risk. So we have this massive disconnect 66 00:03:51,400 --> 00:03:54,440 Speaker 1: between the financial markets and the real economy, a massive 67 00:03:54,440 --> 00:03:57,320 Speaker 1: disconnect between central banks the way they see the economy 68 00:03:57,560 --> 00:04:00,160 Speaker 1: and the way the markets view the central banks. And 69 00:04:00,200 --> 00:04:02,520 Speaker 1: I think part of that is because central banks have 70 00:04:02,600 --> 00:04:05,600 Speaker 1: lost their way. Central banks have lost their their role 71 00:04:05,640 --> 00:04:08,880 Speaker 1: as being anchor for the financial markets because the Fed 72 00:04:08,920 --> 00:04:12,400 Speaker 1: now has become so responsive to financial markets that markets 73 00:04:12,400 --> 00:04:14,680 Speaker 1: can't count on them to stick to the macro fundamentals 74 00:04:14,720 --> 00:04:18,000 Speaker 1: and say, you know, our mandate is maximum employment and 75 00:04:18,040 --> 00:04:21,719 Speaker 1: price ability. Instead it's calming the markets. And that's where 76 00:04:21,720 --> 00:04:25,360 Speaker 1: the current concerning this is very important, very important. Are 77 00:04:25,400 --> 00:04:28,120 Speaker 1: you saying that Janet Yellen and the Fed and other 78 00:04:28,120 --> 00:04:30,960 Speaker 1: central banks have lost credibility with the markets now? No, 79 00:04:31,160 --> 00:04:34,720 Speaker 1: in fact, they have massive credibility. The credibility is absolutely 80 00:04:34,800 --> 00:04:37,160 Speaker 1: guaranteed they're going to try to do something to calm 81 00:04:37,200 --> 00:04:40,000 Speaker 1: the markets. They will delay interest rate normalization, they'll do 82 00:04:40,080 --> 00:04:43,400 Speaker 1: whatever it takes, as Jockie says, whatever it takes to 83 00:04:43,560 --> 00:04:46,440 Speaker 1: keep markets from falling apart. And they did that in 84 00:04:46,520 --> 00:04:49,359 Speaker 1: ninety eight when it was LTCM in the Asian crisis, 85 00:04:49,400 --> 00:04:51,200 Speaker 1: and that was exactly the right thing to do. They 86 00:04:51,279 --> 00:04:53,000 Speaker 1: they did them in two thousand and eight. That was 87 00:04:53,040 --> 00:04:54,960 Speaker 1: exactly the right thing to do. They're doing it now. 88 00:04:55,120 --> 00:04:58,240 Speaker 1: That's exactly the wrong thing to do because the real economy, 89 00:04:58,240 --> 00:05:02,400 Speaker 1: as Janet Yellen was saying, is okay. Sources of weakness, 90 00:05:02,400 --> 00:05:08,240 Speaker 1: sexual energy, geographic, emerging markets in China, UH, political, the 91 00:05:08,360 --> 00:05:12,160 Speaker 1: lack of transparent framework in China, and the confidence of 92 00:05:12,480 --> 00:05:14,600 Speaker 1: lack of confidence we have in leadership there to pull 93 00:05:14,640 --> 00:05:18,200 Speaker 1: it off. Those are the sources of weakness, very well identified, 94 00:05:18,400 --> 00:05:21,520 Speaker 1: very well known. Is their sign of contagion right now? 95 00:05:21,839 --> 00:05:24,080 Speaker 1: None of us can find it, all right, a couple 96 00:05:24,080 --> 00:05:25,560 Speaker 1: of things going on in folks. We're gonna give you 97 00:05:25,560 --> 00:05:28,479 Speaker 1: more data checks today and we're gonna also highlight within 98 00:05:28,560 --> 00:05:31,520 Speaker 1: our interviews what's moving right now. What's moving right now 99 00:05:31,600 --> 00:05:34,960 Speaker 1: is a tenure US yield in a solid eleven basis 100 00:05:35,000 --> 00:05:38,960 Speaker 1: points one point five six zero six. Good morning everyone, 101 00:05:38,960 --> 00:05:44,880 Speaker 1: Bloomberg Surveillance brought you by Investco. Investing isn't about meeting benchmarks, 102 00:05:44,880 --> 00:05:48,719 Speaker 1: It's about achieving goals. Find out how investcos high conviction 103 00:05:48,800 --> 00:05:54,160 Speaker 1: approach can help. Visit investco dot com slash high Conviction, 104 00:05:54,320 --> 00:05:56,000 Speaker 1: Am Mike. A lot to talk about in the markets. 105 00:05:56,000 --> 00:05:58,839 Speaker 1: Why don't you continue with Dr Lee? Well, let's set 106 00:05:58,839 --> 00:06:02,120 Speaker 1: a predicate here for what we're talking about. Your relatively 107 00:06:02,160 --> 00:06:07,560 Speaker 1: optimistic about the economy. Your indicators don't show recession ahead, 108 00:06:07,640 --> 00:06:10,599 Speaker 1: the recession that is being now priced into financial markets. 109 00:06:11,120 --> 00:06:13,599 Speaker 1: In fact, everyone in the world seems to believe not 110 00:06:13,720 --> 00:06:15,560 Speaker 1: only is there a global recession, and by the way 111 00:06:15,560 --> 00:06:17,640 Speaker 1: our house view and Bill and Powder is my boss, 112 00:06:18,080 --> 00:06:21,240 Speaker 1: we are believing that there is a global recession, meaning 113 00:06:21,440 --> 00:06:24,680 Speaker 1: the global economy is growing at slower than potential, absolutely, 114 00:06:24,680 --> 00:06:27,960 Speaker 1: no question about it. But where is that weakness coming from? China, 115 00:06:28,080 --> 00:06:31,120 Speaker 1: emerging markets, the Chin to supply chain, and the commodity 116 00:06:31,240 --> 00:06:34,240 Speaker 1: oil sector at the related countries there. When you look 117 00:06:34,279 --> 00:06:37,680 Speaker 1: at the advanced economies, especially the United States, again, those 118 00:06:37,720 --> 00:06:41,000 Speaker 1: are the same sources of weakness. GDP is growing much 119 00:06:41,040 --> 00:06:45,760 Speaker 1: slower pace than domestic purchases, Why net exports? Why energy? 120 00:06:45,880 --> 00:06:48,040 Speaker 1: Can I ask the money dumb question of the morning? 121 00:06:48,400 --> 00:06:51,080 Speaker 1: Is Janet Yellen tending him? This morning? She sent a 122 00:06:51,160 --> 00:06:54,520 Speaker 1: banker to the world, to that emerging market because she 123 00:06:54,600 --> 00:06:57,880 Speaker 1: need to provide the leadership to the emerging market so 124 00:06:57,920 --> 00:07:00,800 Speaker 1: they make what we all agree are tough decis And 125 00:07:00,839 --> 00:07:02,920 Speaker 1: if that's what she claims to be, she's going to 126 00:07:03,000 --> 00:07:06,080 Speaker 1: be fired because her job is to be the central 127 00:07:06,120 --> 00:07:09,440 Speaker 1: banker to the United States, and the United States policy 128 00:07:09,440 --> 00:07:15,760 Speaker 1: objectives are maximum the US employment, maximum UH price stability 129 00:07:15,960 --> 00:07:18,800 Speaker 1: in the US meaning two percent inflation of the US. 130 00:07:18,840 --> 00:07:21,200 Speaker 1: That's her job. The fact that she does it with 131 00:07:21,400 --> 00:07:23,440 Speaker 1: keeping in mind the rest of the world means that 132 00:07:23,480 --> 00:07:26,680 Speaker 1: she recognizes the US is special. The US is the 133 00:07:26,760 --> 00:07:28,440 Speaker 1: largest economy of the world, and we've got to be 134 00:07:28,480 --> 00:07:32,160 Speaker 1: a good citizen. Absolutely, But our goal is not to 135 00:07:32,240 --> 00:07:35,680 Speaker 1: stabilize the Chinese stock market to a certain extent. Is 136 00:07:35,760 --> 00:07:40,680 Speaker 1: she chasing her tail? The FED talks about raising interest 137 00:07:40,760 --> 00:07:44,920 Speaker 1: rates here because they're worried about UH slack going out 138 00:07:44,920 --> 00:07:47,840 Speaker 1: of our economy because we're growing faster than potential. When 139 00:07:47,880 --> 00:07:50,960 Speaker 1: she does that, the dollar goes higher and it rebounds 140 00:07:51,000 --> 00:07:54,920 Speaker 1: back into growth. In the United States, that might you 141 00:07:55,200 --> 00:07:57,360 Speaker 1: hit it right in the head. That's where the problem is, 142 00:07:57,480 --> 00:08:01,920 Speaker 1: right the transmission polls. The transmission mechanism for montre policy 143 00:08:02,040 --> 00:08:04,560 Speaker 1: used to be short rates go up, long rates go up, 144 00:08:04,640 --> 00:08:06,760 Speaker 1: and then it sort of kills off the housing sector. 145 00:08:06,760 --> 00:08:09,800 Speaker 1: And that's how we slow down the economy. Now because 146 00:08:09,840 --> 00:08:11,800 Speaker 1: the rest of the world is potty into the long end, 147 00:08:12,120 --> 00:08:14,239 Speaker 1: the long end doesn't have a chance to go up anymore. 148 00:08:14,440 --> 00:08:17,080 Speaker 1: And instead the transmission channel is through the exchange rate. 149 00:08:17,280 --> 00:08:20,160 Speaker 1: So when Janet Yellen says we're going to be normalized 150 00:08:20,200 --> 00:08:22,200 Speaker 1: ancious rates while the rest of the world is going down, 151 00:08:22,400 --> 00:08:25,240 Speaker 1: that means the dollar appreciates, and the minute Janet Yellen 152 00:08:25,280 --> 00:08:28,480 Speaker 1: says we're on schedule, that dollar picks up. I want 153 00:08:28,480 --> 00:08:30,000 Speaker 1: to I want to sum here because we've gotta do 154 00:08:30,000 --> 00:08:32,679 Speaker 1: an extended data check. Uh Bill Lee, Folks, stay with 155 00:08:32,760 --> 00:08:35,920 Speaker 1: this market's really uh moving. There's a lot of moving 156 00:08:36,000 --> 00:08:38,800 Speaker 1: parts here, and the guy with you with a fancy parchment, 157 00:08:39,080 --> 00:08:41,840 Speaker 1: fancy degrees, you can keep track of the parts, the 158 00:08:41,880 --> 00:08:45,160 Speaker 1: Newtonian mechanics and all that. I want you to summarize 159 00:08:45,240 --> 00:08:48,640 Speaker 1: this for the dumbest person listening besides me, which is 160 00:08:48,720 --> 00:08:52,480 Speaker 1: it's a search for economic growth. That's really what this 161 00:08:52,559 --> 00:08:56,120 Speaker 1: is about. Where does that growth come or the rate 162 00:08:56,200 --> 00:08:59,400 Speaker 1: of change of growth come for the world right now? 163 00:08:59,600 --> 00:09:01,640 Speaker 1: If the world is relying on monitor policy, get me 164 00:09:01,760 --> 00:09:03,920 Speaker 1: like growth. It means you got to steal it from somebody. 165 00:09:04,160 --> 00:09:07,120 Speaker 1: You got to steal it from someone who's appreciating it. 166 00:09:07,280 --> 00:09:10,520 Speaker 1: Used to be that by by lower ances rates, you've 167 00:09:10,520 --> 00:09:14,120 Speaker 1: grabbed it from the future. You've manufactured more in more account. 168 00:09:14,320 --> 00:09:18,040 Speaker 1: But to Donald Trump and Bernie Sanders success, it's a 169 00:09:18,080 --> 00:09:21,360 Speaker 1: mercantile world, is what you're saying. We have been reduced 170 00:09:21,400 --> 00:09:25,200 Speaker 1: to mercantile world because montre policy is now limited to 171 00:09:25,720 --> 00:09:30,120 Speaker 1: exchange rate mechanisms for the transmission of its bonus round 172 00:09:30,320 --> 00:09:33,440 Speaker 1: Michael Barr Holdby and we gotta sing Kumbaya. Okay, we'n 173 00:09:33,480 --> 00:09:36,800 Speaker 1: sing kumbaya. I'm gonna send out the best paper ever 174 00:09:36,840 --> 00:09:40,240 Speaker 1: written on mercantilism. I'll find it out on the internet, 175 00:09:40,400 --> 00:09:46,040 Speaker 1: Jacob Winer, which completely redefined the post World War two 176 00:09:46,600 --> 00:09:49,160 Speaker 1: analysis of a zero sum game. This is why you 177 00:09:49,240 --> 00:09:52,160 Speaker 1: listen to Bloomberg surveillance, folks. So I'll send you out 178 00:09:52,200 --> 00:09:56,360 Speaker 1: papers that are sixty years old that's still are Germaine today. 179 00:09:56,440 --> 00:09:58,080 Speaker 1: Let me do a day to check. Future is negative 180 00:09:58,120 --> 00:10:01,520 Speaker 1: thirty seven, a little bit lower. Early Dow futures negative 181 00:10:01,559 --> 00:10:04,120 Speaker 1: three oh seven. The tenure yield is the front line 182 00:10:04,200 --> 00:10:08,160 Speaker 1: story right now one point five six nine one. We 183 00:10:08,320 --> 00:10:12,240 Speaker 1: just contacted Steve Major at HSBC. He's an endless meetings 184 00:10:12,240 --> 00:10:15,120 Speaker 1: with his bank this morning. We hope to have Mr Major. 185 00:10:15,400 --> 00:10:19,560 Speaker 1: I'm Bloomberg Radio tomorrow with this really outline our call 186 00:10:19,600 --> 00:10:21,599 Speaker 1: of a one fifty. He looks like the genius to 187 00:10:21,720 --> 00:10:27,040 Speaker 1: jure right now, West Texas thirty seven and accelerating lower 188 00:10:27,120 --> 00:10:30,240 Speaker 1: down a dollar seven Brent crude like a rock at 189 00:10:30,320 --> 00:10:34,760 Speaker 1: thirty dollars thirty dollars thirty cents. The yen in was 190 00:10:34,880 --> 00:10:38,680 Speaker 1: in two big figures one eleven forty two on euro 191 00:10:38,800 --> 00:10:44,040 Speaker 1: yen nine, showing relative yen strength to the Euro. And 192 00:10:44,080 --> 00:10:46,280 Speaker 1: I might point out gold on a tear up forty 193 00:10:46,480 --> 00:10:53,079 Speaker 1: one dollars twelve thirty six, the bullmarket bounce seven ten 194 00:10:53,120 --> 00:10:54,920 Speaker 1: at All Street. Let's check in with Michael Barr and 195 00:10:54,920 --> 00:10:57,559 Speaker 1: get the latest world in national headlines. Michael, Mike, Tom, 196 00:10:57,600 --> 00:11:00,400 Speaker 1: thank you very much. Defense Secretary Ash Carter's sense he 197 00:11:00,440 --> 00:11:03,240 Speaker 1: sees more than two dozen countries contributing to the war 198 00:11:03,320 --> 00:11:07,280 Speaker 1: against the Islamic State in Syria and Iraq to endorse 199 00:11:07,280 --> 00:11:10,800 Speaker 1: the US plan for accelerating the campaign this year. Carter 200 00:11:11,000 --> 00:11:13,880 Speaker 1: is at NATO headquarters in Brussels, where today he will 201 00:11:13,960 --> 00:11:16,400 Speaker 1: lay out the tales of the campaign plan in a 202 00:11:16,480 --> 00:11:20,200 Speaker 1: meeting with allies and non NATO partners such as Saudi 203 00:11:20,280 --> 00:11:24,360 Speaker 1: Arabia and Iraq. North Korea has ordered the military takeover 204 00:11:24,400 --> 00:11:27,120 Speaker 1: of a factory park that was the last major symbol 205 00:11:27,120 --> 00:11:30,560 Speaker 1: of cooperation with South Korea. The move follows Soul's announcement 206 00:11:30,600 --> 00:11:33,360 Speaker 1: that it's pulling out of the industrial park to punish 207 00:11:33,400 --> 00:11:36,200 Speaker 1: North Korean leader Kim John Un for recent nuclear and 208 00:11:36,400 --> 00:11:40,040 Speaker 1: missile tests. The Senate today will likely vote to approve 209 00:11:40,080 --> 00:11:43,600 Speaker 1: a permanent ban on taxing internet access as part of 210 00:11:43,600 --> 00:11:46,560 Speaker 1: a wide ranging measure that would also revamp trade laws. 211 00:11:46,679 --> 00:11:49,360 Speaker 1: Global News twenty four hours a day, powered by our 212 00:11:49,520 --> 00:11:53,680 Speaker 1: two hundred journalists. I'm Michael Barr, Mike Tom, Michael Barr, 213 00:11:53,679 --> 00:11:55,560 Speaker 1: thanks so much. You can stay with us. Extra data 214 00:11:55,640 --> 00:11:58,559 Speaker 1: checks for this morning with with Markets on the Move, 215 00:11:58,679 --> 00:12:02,679 Speaker 1: Futures Negative thirty seven with Billy of Sitting Group, Bloomberg Surveillance, 216 00:12:05,640 --> 00:12:08,760 Speaker 1: Bloomberg surveillance is brought to you by Commonwealth Financial Network. 217 00:12:08,800 --> 00:12:10,599 Speaker 1: When it's time to change the conversation, talk with the 218 00:12:10,600 --> 00:12:12,600 Speaker 1: broker dealer r i A that's ready to listen. Call 219 00:12:12,640 --> 00:12:14,480 Speaker 1: eight six six or six two or three six three 220 00:12:14,520 --> 00:12:22,960 Speaker 1: eight or visit Commonwealth dot com to learn more. Global 221 00:12:22,960 --> 00:12:26,120 Speaker 1: business news twenty four hours a day. If Bloomberg dot 222 00:12:26,120 --> 00:12:29,000 Speaker 1: com the radio plus mobile lapp and on your radio. 223 00:12:29,280 --> 00:12:33,079 Speaker 1: This is a Bloomberg Business Flash and I'm Karen Moscown. 224 00:12:33,080 --> 00:12:36,240 Speaker 1: There's updates brought to you by National Realty Returns on 225 00:12:36,320 --> 00:12:38,480 Speaker 1: cash and rented real estate. Find them at n r 226 00:12:38,559 --> 00:12:41,880 Speaker 1: i A dot net. US dot Index futures are following 227 00:12:41,880 --> 00:12:45,720 Speaker 1: oil prices lower with investors shunning risk worldwide as Asian 228 00:12:45,720 --> 00:12:48,080 Speaker 1: markets reopened to join a global sell off. We checked 229 00:12:48,120 --> 00:12:50,680 Speaker 1: the markets every fifteen minutes throughout the trading day on 230 00:12:50,720 --> 00:12:54,520 Speaker 1: Bloomberg SNP E mini futures down thirty nine points, DOWIE 231 00:12:54,520 --> 00:12:58,520 Speaker 1: mini futures down three twenty six, NASDAC emni futures down 232 00:12:58,600 --> 00:13:01,520 Speaker 1: ninety three. That's down to point three percent. Dash in 233 00:13:01,600 --> 00:13:04,240 Speaker 1: Germany's down two point nine percent, CAC in Paris down 234 00:13:04,240 --> 00:13:07,800 Speaker 1: four percent, FT one down two point four percent. Ten 235 00:13:07,880 --> 00:13:10,280 Speaker 1: year Treasury up thirty thirty seconds, the yeld one point 236 00:13:10,320 --> 00:13:13,319 Speaker 1: five six percent. Nimex screwed oil down four and a 237 00:13:13,400 --> 00:13:16,120 Speaker 1: quarter percent out of dollar seventeen to twenty six dollars 238 00:13:16,160 --> 00:13:18,640 Speaker 1: twenty eight cents of barrel comes gold up three and 239 00:13:18,679 --> 00:13:21,000 Speaker 1: a half percent, or forty two dollars ten cents at 240 00:13:21,000 --> 00:13:24,440 Speaker 1: twelve thirty six seventy announced the euro A dollar thirteen 241 00:13:24,520 --> 00:13:27,880 Speaker 1: forty two, the yen one eleven point three eight. And 242 00:13:27,880 --> 00:13:31,280 Speaker 1: that's a Bloomberg business flash, Tom and Mike Karen, thanks 243 00:13:31,280 --> 00:13:34,079 Speaker 1: so much. I just sent out UniCredit and Deutsche Bank charts, 244 00:13:34,160 --> 00:13:37,760 Speaker 1: both banks as a proxy for European branking breaking down 245 00:13:37,760 --> 00:13:42,920 Speaker 1: a UniCredit very close to new lows. Deutsche Bank not 246 00:13:43,040 --> 00:13:46,760 Speaker 1: quite there yet, thirteen point three five euros on the 247 00:13:46,800 --> 00:13:50,319 Speaker 1: European quote with the inter day thirteen point oh three, 248 00:13:50,400 --> 00:13:52,800 Speaker 1: but uh, you know, there we are. We just heard 249 00:13:52,840 --> 00:13:55,600 Speaker 1: Stephen Major will be with us tomorrow from hs BC 250 00:13:55,760 --> 00:13:58,840 Speaker 1: with a yield one point five seven percent. William Lee 251 00:13:58,920 --> 00:14:01,360 Speaker 1: with us working with Villain bout her It's City Group, 252 00:14:01,360 --> 00:14:04,400 Speaker 1: and he has such a story career at the I 253 00:14:04,640 --> 00:14:07,280 Speaker 1: m f UM that I think I want to digress 254 00:14:07,320 --> 00:14:09,800 Speaker 1: here and talk about Leguard's new mediocre. She looks like 255 00:14:09,840 --> 00:14:13,120 Speaker 1: a genius, or I should say she and Blanchard in 256 00:14:13,200 --> 00:14:18,160 Speaker 1: the piece. Yeah, well there's that too. But the idea 257 00:14:18,240 --> 00:14:21,000 Speaker 1: of a new mediocre, how do you filter that with 258 00:14:21,120 --> 00:14:23,640 Speaker 1: your I m F experience? You know, it used to 259 00:14:23,680 --> 00:14:26,240 Speaker 1: be that the IMF were considered the stormtroopers. They were 260 00:14:26,240 --> 00:14:28,640 Speaker 1: the ones who went around enforcing what was supposed to 261 00:14:28,680 --> 00:14:31,480 Speaker 1: be the right policy. The new mediocre also applies the 262 00:14:31,520 --> 00:14:33,560 Speaker 1: I m F. I'm sorry, I'm sad to say. As 263 00:14:33,640 --> 00:14:35,320 Speaker 1: much as the genius is, I think the world thinks 264 00:14:35,440 --> 00:14:39,600 Speaker 1: Leguard and Blanchard were um, they have also lowered the 265 00:14:39,680 --> 00:14:42,680 Speaker 1: standards by which policymakers are joke, they gotta be tougher. 266 00:14:42,720 --> 00:14:45,920 Speaker 1: They gotta be tougher because they're they're allowing too many concessions, 267 00:14:46,040 --> 00:14:49,560 Speaker 1: especially in the your area. What was the problem was 268 00:14:50,240 --> 00:14:53,200 Speaker 1: it was structural and they and the standard I m 269 00:14:53,240 --> 00:14:56,040 Speaker 1: F program is you put in structural reforms and everyone 270 00:14:56,120 --> 00:14:58,440 Speaker 1: knows that the IMF it takes five to ten years 271 00:14:58,440 --> 00:15:01,720 Speaker 1: before those structural programs take hold. Meanwhile, Montre Paul is 272 00:15:01,720 --> 00:15:04,560 Speaker 1: supposed to fill in the gap. Instead, Montrey policy has 273 00:15:04,560 --> 00:15:07,640 Speaker 1: now become the primary tool, and structure reforms are being 274 00:15:07,640 --> 00:15:09,800 Speaker 1: put in the in the background. Every time drawing he 275 00:15:09,840 --> 00:15:11,920 Speaker 1: makes a speech, he says, I'm waiting for you guys 276 00:15:11,960 --> 00:15:13,920 Speaker 1: to use the time on buying you. He needs the 277 00:15:13,920 --> 00:15:16,320 Speaker 1: i m F to get us back and he's got 278 00:15:16,360 --> 00:15:18,280 Speaker 1: to get the IMF back there and say you got 279 00:15:18,280 --> 00:15:21,040 Speaker 1: to do the structure reforms, and instead the IMF says, oh, 280 00:15:21,240 --> 00:15:23,920 Speaker 1: take your time. We understand it's a hard thing to do. 281 00:15:24,120 --> 00:15:25,760 Speaker 1: You can have a lot of unemployment and guess what, 282 00:15:25,880 --> 00:15:27,920 Speaker 1: you're gonna have a lot of political unrest. Well, that's 283 00:15:27,960 --> 00:15:30,680 Speaker 1: exactly why it is that you put in these reforms 284 00:15:30,880 --> 00:15:32,680 Speaker 1: at a time when you try to get the economy 285 00:15:32,840 --> 00:15:38,080 Speaker 1: to be more efficient. But everybody loves Madame Legarde, but 286 00:15:38,800 --> 00:15:42,000 Speaker 1: nobody in Italy, nobody in France is listening to her. 287 00:15:42,160 --> 00:15:44,360 Speaker 1: They're not gonna make policy based and you can get 288 00:15:44,400 --> 00:15:46,200 Speaker 1: the i m F in there, but it's not gonna 289 00:15:46,320 --> 00:15:48,640 Speaker 1: change anything. You might change it for Greece because they 290 00:15:48,640 --> 00:15:50,160 Speaker 1: need the i MS money, but if you're not going 291 00:15:50,200 --> 00:15:52,440 Speaker 1: to the I m F tomorrow, you're not gonna follow 292 00:15:52,480 --> 00:15:54,600 Speaker 1: their prescriptions. And that's why when I was on the 293 00:15:54,680 --> 00:15:56,160 Speaker 1: US that's at the at the I m F, it 294 00:15:56,240 --> 00:15:58,520 Speaker 1: was considered the most prestigious job in the IMF because 295 00:15:58,520 --> 00:15:59,920 Speaker 1: you were dealing with the top e columns in the 296 00:16:00,200 --> 00:16:02,160 Speaker 1: But it's also the most useless job because the IMF says, 297 00:16:02,200 --> 00:16:06,120 Speaker 1: thank you very much, goodbye. But you know what did 298 00:16:06,120 --> 00:16:08,320 Speaker 1: the I left do during the Asian crisis. They actually 299 00:16:08,360 --> 00:16:11,160 Speaker 1: put in reforms. They said, look, you can't have fixed 300 00:16:11,200 --> 00:16:13,600 Speaker 1: exchange of regimes. You have to start floating. And that 301 00:16:13,640 --> 00:16:16,120 Speaker 1: really did the world a tremendous service. What are they 302 00:16:16,160 --> 00:16:18,720 Speaker 1: telling the world now, you gotta put in structural forms 303 00:16:18,760 --> 00:16:20,440 Speaker 1: and what's the world telling them? We'll do it like 304 00:16:21,440 --> 00:16:24,400 Speaker 1: a floating exchange rate. A managed float is one of 305 00:16:24,520 --> 00:16:28,200 Speaker 1: Rogoff's fourteen flavors of floating. It can't be afloat until 306 00:16:28,200 --> 00:16:30,760 Speaker 1: you get the financial reforms in place. You can't have 307 00:16:30,800 --> 00:16:34,480 Speaker 1: a float unless you have convertibility. Unless you have is 308 00:16:34,480 --> 00:16:37,880 Speaker 1: that critical now for stability within the global system. For 309 00:16:38,040 --> 00:16:41,400 Speaker 1: China to do their part because Domini Constant Mike is 310 00:16:41,480 --> 00:16:45,040 Speaker 1: really big on this thing discovery where the where the 311 00:16:45,080 --> 00:16:48,280 Speaker 1: remby should be the equilibrium price is something you can't 312 00:16:48,320 --> 00:16:51,320 Speaker 1: do with administrators, and that's where the markets come in. 313 00:16:51,400 --> 00:16:53,680 Speaker 1: But you can't allow the markets to work unless you've 314 00:16:53,720 --> 00:16:56,120 Speaker 1: got the infrastructure in place, because right now, if you 315 00:16:56,160 --> 00:17:00,400 Speaker 1: allowed the revate to float, and with all these capitals controls, 316 00:17:00,520 --> 00:17:02,120 Speaker 1: you have them to clue what you're doing. You don't 317 00:17:02,120 --> 00:17:04,280 Speaker 1: know where the float is going to. It's probably going 318 00:17:04,320 --> 00:17:07,320 Speaker 1: to be to a distorted price. Do we have any 319 00:17:07,359 --> 00:17:13,160 Speaker 1: idea of uh, how tied to the macro economy of 320 00:17:13,320 --> 00:17:18,200 Speaker 1: China is That's that's a great point. That's a great point. 321 00:17:18,240 --> 00:17:20,719 Speaker 1: Hold on a minute. He's had three great points today 322 00:17:20,960 --> 00:17:24,480 Speaker 1: and I've been squat I'm getting warmed up. I've been 323 00:17:24,480 --> 00:17:27,960 Speaker 1: telling you on TV. But but, but my the connection 324 00:17:28,000 --> 00:17:31,240 Speaker 1: between the financial sector and the real economy, it normally 325 00:17:31,359 --> 00:17:33,960 Speaker 1: is tied together through the markets. But guess what, China 326 00:17:34,000 --> 00:17:36,600 Speaker 1: has no markets. They're trying to create the markets and 327 00:17:36,640 --> 00:17:41,399 Speaker 1: instead they have administered um banking and minister banking means 328 00:17:41,560 --> 00:17:44,000 Speaker 1: directed lending, and that's what got them into trouble for 329 00:17:44,400 --> 00:17:46,199 Speaker 1: and right now they're trying to cut back on that, 330 00:17:46,320 --> 00:17:48,760 Speaker 1: and at the same time they need to do fiscal policy. 331 00:17:48,840 --> 00:17:51,199 Speaker 1: How do you cut back on directed lending, which is 332 00:17:51,200 --> 00:17:53,160 Speaker 1: the wrong thing to do, and at the same time 333 00:17:53,440 --> 00:17:57,360 Speaker 1: encourage somehow people to start spending money. That's a hard thing. 334 00:17:57,400 --> 00:17:59,280 Speaker 1: You hope you have a decent economy and a quiet, 335 00:17:59,280 --> 00:18:02,760 Speaker 1: calm market environment to do it in. But they don't now, 336 00:18:02,960 --> 00:18:04,560 Speaker 1: so they're not gonna. They're not gonna do it, are they. 337 00:18:04,560 --> 00:18:06,400 Speaker 1: They're gonna come to the rescue of these companies. They're 338 00:18:06,400 --> 00:18:08,600 Speaker 1: gonna prop everything up for the moment. The hope and 339 00:18:08,640 --> 00:18:11,080 Speaker 1: prayer for China right now are these structural reforms they 340 00:18:11,119 --> 00:18:13,639 Speaker 1: putting in place, many shifting towards the private sector, shifts 341 00:18:13,640 --> 00:18:16,720 Speaker 1: and toward consumption. Trouble is, there's no transparency there. We 342 00:18:16,800 --> 00:18:19,639 Speaker 1: haven't the clue how strong that sector is. And the 343 00:18:19,720 --> 00:18:22,560 Speaker 1: lack of data, the lack of transparency into China is 344 00:18:22,560 --> 00:18:24,879 Speaker 1: at the heart of not only China's crisis, but the 345 00:18:25,000 --> 00:18:27,400 Speaker 1: global crisis. I'm want to go back to them, your 346 00:18:27,440 --> 00:18:32,280 Speaker 1: wonderful thoughts on mercantile and zero some world. If it's 347 00:18:32,280 --> 00:18:36,040 Speaker 1: a zero some world, the take the I gotta do 348 00:18:36,160 --> 00:18:39,679 Speaker 1: the language right. The take within it is the United States. 349 00:18:39,960 --> 00:18:45,120 Speaker 1: They're gonna take our growth, They're gonna take our marginal Yeah, 350 00:18:45,200 --> 00:18:47,440 Speaker 1: I am, But I used I use that bete for 351 00:18:47,600 --> 00:18:50,040 Speaker 1: because I want to be provocative and and but it's true. 352 00:18:50,560 --> 00:18:53,040 Speaker 1: When the only transmission channel of the main channel is 353 00:18:53,080 --> 00:18:55,360 Speaker 1: through the exchange rate and not through like they're taking 354 00:18:55,480 --> 00:18:58,640 Speaker 1: from from the appreciating currency. And right now the only 355 00:18:58,680 --> 00:19:01,359 Speaker 1: appreciating currency that matters is the US. That means that 356 00:19:01,400 --> 00:19:03,320 Speaker 1: you've got to grab the US growth. We don't have 357 00:19:03,440 --> 00:19:06,200 Speaker 1: much to grab right We've got to two percent GDP growth, 358 00:19:06,359 --> 00:19:09,000 Speaker 1: maybe three percent domestic demand. But for the for for 359 00:19:09,040 --> 00:19:11,760 Speaker 1: a small but economy like Sweden, that's a lot Quickly, 360 00:19:11,800 --> 00:19:14,000 Speaker 1: Michael harton and over a Bank of American merriledge making 361 00:19:14,000 --> 00:19:17,760 Speaker 1: a lot of waves on some form of new collegial 362 00:19:17,760 --> 00:19:20,560 Speaker 1: agreement called a new Plaza accord. Where are you embouder 363 00:19:20,600 --> 00:19:23,600 Speaker 1: on this? Absolutely not, absolutely not. I think the worst 364 00:19:23,640 --> 00:19:27,160 Speaker 1: thing you can do is to have policymakers coordinate exchange rates. 365 00:19:27,400 --> 00:19:30,920 Speaker 1: Policymakers should do what they're supposed to do best policy 366 00:19:31,000 --> 00:19:34,399 Speaker 1: for their own economies. The markets will determine where the 367 00:19:34,400 --> 00:19:37,800 Speaker 1: equipment exchangers will be. I don't think there's any instance 368 00:19:37,840 --> 00:19:41,000 Speaker 1: besides one with applause of type agreements work. Okay, well, 369 00:19:41,080 --> 00:19:43,320 Speaker 1: we we could go on for one another three hours 370 00:19:43,320 --> 00:19:46,560 Speaker 1: with William Lee of City Group. There's so much going on, 371 00:19:46,600 --> 00:19:50,560 Speaker 1: and yes we're efforting select guests on this select market move. 372 00:19:51,040 --> 00:19:54,760 Speaker 1: Futures improve a little bit off of the carnage of 373 00:19:54,760 --> 00:19:58,439 Speaker 1: twenty minutes ago negative thirty four. Down futures were negative 374 00:19:58,440 --> 00:20:01,119 Speaker 1: three underdown negative two A. Did you stay with us 375 00:20:01,119 --> 00:20:08,040 Speaker 1: worldwide Bloomberg Surveillance. Bloomberg Surveillance is brought you by the 376 00:20:08,080 --> 00:20:10,320 Speaker 1: Breaker's Palm Beach. This winter, the Breaker's Palm Beach is 377 00:20:10,320 --> 00:20:12,479 Speaker 1: better than ever. Come see why visit the Breakers dot 378 00:20:12,560 --> 00:20:24,440 Speaker 1: Com called Breakers, or contact your travel professional. Broadcasting live 379 00:20:24,560 --> 00:20:27,920 Speaker 1: to New York, Bloomberg eleventh, Ryo to Washington, d C, 380 00:20:28,119 --> 00:20:33,399 Speaker 1: Bloomberg to Boston, Bloomberg twelve Hunders to San Francisco, Bloomberg 381 00:20:33,480 --> 00:20:37,240 Speaker 1: nine to the Country series Exam Channel one ninety and 382 00:20:37,440 --> 00:20:41,480 Speaker 1: around the globe the Bloomberg Radio Plus happened Bloomberg dot Com. 383 00:20:41,480 --> 00:20:45,199 Speaker 1: This is Bloomberg Surveillance running at seven thirty on Wall 384 00:20:45,240 --> 00:20:48,360 Speaker 1: Street and Michael McKee along with Tom Keene, we are 385 00:20:48,400 --> 00:20:51,960 Speaker 1: looking at some of the corporate news that will affect 386 00:20:52,119 --> 00:20:55,680 Speaker 1: trading today. PepsiCo says Prophet this year will rise about 387 00:20:55,680 --> 00:20:58,800 Speaker 1: two percent strong dollar, weighing on revenue earnings four dollar 388 00:20:58,880 --> 00:21:01,959 Speaker 1: sixty six cents a year four share, they forecast, up 389 00:21:01,960 --> 00:21:05,080 Speaker 1: from four fifty seven last year. Analysts estimated four dollars 390 00:21:05,080 --> 00:21:08,040 Speaker 1: and seventy six cents. Fourth quarter profit was a dollar 391 00:21:08,119 --> 00:21:12,240 Speaker 1: six to share that matched analyst estimates. SoC General shares 392 00:21:12,320 --> 00:21:15,680 Speaker 1: are down this morning by almost twelve percent, France's second 393 00:21:15,760 --> 00:21:19,720 Speaker 1: largest bank, posting fourth quarter profit that missed estimates. Twitter 394 00:21:19,760 --> 00:21:22,879 Speaker 1: shares at the moment are down by seven percent, the 395 00:21:22,920 --> 00:21:26,600 Speaker 1: social media site adding no net users in the fourth 396 00:21:27,160 --> 00:21:29,760 Speaker 1: in the fourth quarter. Now, let's check in with Michael 397 00:21:29,760 --> 00:21:33,600 Speaker 1: Barr and get the latest world and national headlines. Michael, Mike. 398 00:21:33,680 --> 00:21:36,760 Speaker 1: The last four people to occupy a national wildlife refuge 399 00:21:36,760 --> 00:21:40,000 Speaker 1: in eastern Oregon say they're giving themselves up to authorities. 400 00:21:40,000 --> 00:21:43,520 Speaker 1: In just a few hours last night, law officers surrounded 401 00:21:43,560 --> 00:21:46,560 Speaker 1: the wildlife refuge in a ten standoff. The group, led 402 00:21:46,600 --> 00:21:49,919 Speaker 1: by Amin Bundy, sees the refuge on January second to 403 00:21:50,240 --> 00:21:54,199 Speaker 1: oppose federal land use policies. Bundy was later arrested and 404 00:21:54,240 --> 00:21:57,480 Speaker 1: his father was taken into custody. Last night, ADO says 405 00:21:57,480 --> 00:22:00,480 Speaker 1: it will deploy a significant number of troops to Eastern Europe. 406 00:22:00,720 --> 00:22:03,800 Speaker 1: It is a move to fight Russian aggression. Defense Secretary 407 00:22:03,840 --> 00:22:07,280 Speaker 1: Ash Carter, speaking in Brussels today, says the US would 408 00:22:07,280 --> 00:22:11,520 Speaker 1: be providing significant assistance to the Determent Plan. In particular, 409 00:22:11,920 --> 00:22:17,520 Speaker 1: the budget quadruples funding for the Europeans Reassurance Initiative to 410 00:22:17,600 --> 00:22:22,119 Speaker 1: a total of three point four billion dollars and broadens 411 00:22:22,119 --> 00:22:27,040 Speaker 1: its focus to include deterring Russian aggression against NATO allies. 412 00:22:27,560 --> 00:22:30,640 Speaker 1: Carter also called on NATO coalition partners to do more 413 00:22:30,680 --> 00:22:34,920 Speaker 1: defined ices. Tensions between North and South Korea are escalating 414 00:22:34,960 --> 00:22:38,000 Speaker 1: sharply after the Young Yang launched a long range rocket 415 00:22:38,040 --> 00:22:41,480 Speaker 1: over the weekend. North Korea says it's kicking South Koreans 416 00:22:41,520 --> 00:22:44,600 Speaker 1: out of the country. Global News twenty four hours a day, 417 00:22:44,600 --> 00:22:47,600 Speaker 1: powered by our twenty four hundred journalists more than a 418 00:22:47,680 --> 00:22:50,600 Speaker 1: hundred fifty news bureaus from around the world. I'm Michael 419 00:22:50,600 --> 00:22:54,240 Speaker 1: bar Mike. Thank you, Michael. Now time for the BLUEMBERG 420 00:22:54,400 --> 00:22:57,520 Speaker 1: NBC Sports Update with John stash Over. John all Right, Mike. 421 00:22:57,640 --> 00:22:59,880 Speaker 1: Rangers went to Pittsburgh to face the hot team Penguins 422 00:22:59,880 --> 00:23:02,600 Speaker 1: and won six and seven. Sydney Crosby ten goals in 423 00:23:02,640 --> 00:23:05,240 Speaker 1: those seven games, but the Rangers cooled him and the 424 00:23:05,240 --> 00:23:07,720 Speaker 1: Penguins off, winning three nothing for their fourth straight win. 425 00:23:07,800 --> 00:23:11,560 Speaker 1: Thirty fourth saves for Henrik Lundquist. The coaches, Elaine Vigno, 426 00:23:11,960 --> 00:23:15,000 Speaker 1: You know we played their top players. Well, we made 427 00:23:15,000 --> 00:23:17,080 Speaker 1: sure we had that pressure. We made sure we had 428 00:23:17,200 --> 00:23:21,240 Speaker 1: numbers and uh, you know, yes, they probably got a 429 00:23:21,240 --> 00:23:24,080 Speaker 1: lot of shot attempts, but we were keeping it to 430 00:23:24,119 --> 00:23:26,320 Speaker 1: the outside and when they got on the inside, they 431 00:23:26,600 --> 00:23:28,760 Speaker 1: made some real big stage for US. Rangers host l 432 00:23:28,800 --> 00:23:31,119 Speaker 1: A tomorrow and night. Kings are in Brooklyn tonight facing 433 00:23:31,160 --> 00:23:34,359 Speaker 1: the Islanders Barkley Center last night then Nets forty loss, 434 00:23:34,400 --> 00:23:35,960 Speaker 1: so they go to the All Star Break after being 435 00:23:35,960 --> 00:23:38,879 Speaker 1: outscored by Memphis in the third quarter thirty nine to eighteen. 436 00:23:38,920 --> 00:23:41,400 Speaker 1: The final was one oh nine to ninety. Joe Johnson 437 00:23:41,440 --> 00:23:44,680 Speaker 1: oh for three first time since two thousand three. Johnson 438 00:23:44,720 --> 00:23:48,000 Speaker 1: didn't score a single basket nine thirty seven games in 439 00:23:48,000 --> 00:23:51,479 Speaker 1: a all the longest active streak eight longest in NBA history. 440 00:23:51,800 --> 00:23:54,679 Speaker 1: The twenty one and next to last meeting between Lebron 441 00:23:54,800 --> 00:23:58,320 Speaker 1: James and Kobe Bryant has expected the Cavs one Golden 442 00:23:58,320 --> 00:24:00,680 Speaker 1: State won in Phoenix. That's the War is eleventh wint 443 00:24:00,680 --> 00:24:04,119 Speaker 1: in a row over time in Boston, Celtics one thirty nine, 444 00:24:04,359 --> 00:24:07,840 Speaker 1: Clippers one tho. With the Bloomberg NBC Sports Update, I'm 445 00:24:07,920 --> 00:24:12,200 Speaker 1: John Stash Now, thank you John. It is a red 446 00:24:12,280 --> 00:24:14,680 Speaker 1: screen kind of day. S and P futures off by 447 00:24:14,760 --> 00:24:17,280 Speaker 1: thirty two points right now, one point seven percent. Dow 448 00:24:17,480 --> 00:24:20,080 Speaker 1: even he's off by two hundred seventy points one point 449 00:24:20,119 --> 00:24:22,640 Speaker 1: seven percent. Believe it or not, those are off their 450 00:24:22,760 --> 00:24:27,639 Speaker 1: loads of the day. Dollar index falling today point six 451 00:24:27,720 --> 00:24:30,760 Speaker 1: oh one and the yen the big currency mover of 452 00:24:30,760 --> 00:24:38,919 Speaker 1: the day one eleven. This is Bloomberg surveillance. This is 453 00:24:38,920 --> 00:24:42,840 Speaker 1: Bloomberg surveillance SI Michael McKee along with Tom Keane. It 454 00:24:43,000 --> 00:24:46,960 Speaker 1: is going to be a tough day for traders. SMP, 455 00:24:47,200 --> 00:24:50,400 Speaker 1: Dow and NASDAC features all down by more than one 456 00:24:50,480 --> 00:24:53,600 Speaker 1: and three quarters percent. The stock six hundred in Europe 457 00:24:53,680 --> 00:24:56,879 Speaker 1: is down by ten points. That's a three percent drop 458 00:24:56,920 --> 00:24:59,120 Speaker 1: on the day. And listen to this ten ure yield 459 00:24:59,240 --> 00:25:02,640 Speaker 1: one point five seven percent to five year one oh 460 00:25:02,680 --> 00:25:06,639 Speaker 1: one and sixty basis points for your two year yield. 461 00:25:06,760 --> 00:25:10,200 Speaker 1: It is setting up to be a rough morning time 462 00:25:10,240 --> 00:25:12,200 Speaker 1: now for the Bloomberg n j I t STEM Report 463 00:25:12,200 --> 00:25:14,680 Speaker 1: brought to you by New Jersey Institute of Technology, partnering 464 00:25:14,680 --> 00:25:18,000 Speaker 1: with government and industry to apply the university's world class 465 00:25:18,000 --> 00:25:20,920 Speaker 1: research assets to innovate and spur economic growth. Learn more 466 00:25:21,160 --> 00:25:23,760 Speaker 1: at n j I T dot E d U. Here's 467 00:25:23,760 --> 00:25:27,560 Speaker 1: Patricia car Good morning, Michael. Businesses are most concerned about 468 00:25:27,680 --> 00:25:31,200 Speaker 1: cyber attacks. A survey by the Business Continuity Institute of 469 00:25:31,280 --> 00:25:35,120 Speaker 1: five sixty eight companies across seventy four countries finds eighty 470 00:25:35,200 --> 00:25:37,840 Speaker 1: five percent fear of cyber attacks such as a malware 471 00:25:38,119 --> 00:25:41,720 Speaker 1: or distributed denial of service attack. The number two data 472 00:25:41,760 --> 00:25:47,320 Speaker 1: breaches at eight. There was also increasing concern about physical terrorism, vandalism, theft, 473 00:25:47,359 --> 00:25:50,840 Speaker 1: and fraud. Flying to Europe may take less time, but 474 00:25:50,960 --> 00:25:54,200 Speaker 1: coming back to the US could take considerably more. British 475 00:25:54,200 --> 00:25:57,520 Speaker 1: researchers studying climate change concluded doubling of carbon dioxide in 476 00:25:57,560 --> 00:26:01,000 Speaker 1: the atmosphere will speed up the jet stream fifteen percent 477 00:26:01,320 --> 00:26:03,640 Speaker 1: as it moves from west to east across the Atlantic, 478 00:26:03,920 --> 00:26:06,200 Speaker 1: meaning a trip from London to New York could eventually 479 00:26:06,200 --> 00:26:09,639 Speaker 1: take more than seven hours. And that's this morning, Bloomberg 480 00:26:09,720 --> 00:26:13,720 Speaker 1: n j I T STEM report, Patrice, Thank you very much. 481 00:26:14,480 --> 00:26:18,280 Speaker 1: West Texas Intermedia five down three point six percent on 482 00:26:18,320 --> 00:26:21,439 Speaker 1: the day. Brent crude thirty thirty two, down one and 483 00:26:21,520 --> 00:26:24,320 Speaker 1: three quarters percent. And of course when oil falls, so 484 00:26:24,560 --> 00:26:27,639 Speaker 1: does the Russian ruble. Right now, coming in at seventy 485 00:26:27,720 --> 00:26:32,880 Speaker 1: nine point seven seven five seven. The Mysex Index down 486 00:26:32,880 --> 00:26:36,520 Speaker 1: two percent on the day. In Russia off thirty six points. 487 00:26:38,960 --> 00:26:43,040 Speaker 1: Uh Daniel Hewitt, I'm sorry. His Barkley's senior E M. E. 488 00:26:43,119 --> 00:26:48,280 Speaker 1: A economist and he covers Russia and uh Daniel. Last year, 489 00:26:48,320 --> 00:26:51,439 Speaker 1: in two thousand and fifteen, the Russian economy contracted, according 490 00:26:51,480 --> 00:26:54,199 Speaker 1: to your figures, about three point seven percent, and that 491 00:26:54,320 --> 00:26:58,919 Speaker 1: was with oil in the forty range at thirty dollars 492 00:26:59,040 --> 00:27:01,440 Speaker 1: or in the twenty The outlook for two thousand and 493 00:27:01,440 --> 00:27:06,159 Speaker 1: sixteen can't be very good. No, Russia is still highly 494 00:27:06,200 --> 00:27:09,800 Speaker 1: depended upon oil for their economy, particularly the budget is 495 00:27:10,240 --> 00:27:14,560 Speaker 1: linked to oil revenues. So Russia's economy is under a 496 00:27:14,560 --> 00:27:18,560 Speaker 1: lot of pressure right now. What can they do given 497 00:27:18,960 --> 00:27:23,119 Speaker 1: the situation? Vladimia Putin has promised not to raise taxes 498 00:27:23,440 --> 00:27:26,440 Speaker 1: until the next election, which is two thousand eighteen, so 499 00:27:27,119 --> 00:27:32,200 Speaker 1: does he have any options? They don't have a lot 500 00:27:32,200 --> 00:27:35,440 Speaker 1: of options. But one has to give the Russian government 501 00:27:35,480 --> 00:27:38,600 Speaker 1: a lot of credit for having adjusted already quite a 502 00:27:38,640 --> 00:27:42,560 Speaker 1: bit to lower oil prices. Both monetary policy has done 503 00:27:42,560 --> 00:27:45,720 Speaker 1: well by allowing the route to float rather than trying 504 00:27:45,720 --> 00:27:49,400 Speaker 1: to protect the exchange rate, and fiscal policy has made 505 00:27:49,440 --> 00:27:53,640 Speaker 1: adjustments in cutting back expenditures to a large extent um, 506 00:27:53,680 --> 00:27:56,119 Speaker 1: but still they're they're in for a lot more trouble 507 00:27:56,200 --> 00:27:58,720 Speaker 1: on the fiscal side. The fiscal is particularly weak right 508 00:27:58,720 --> 00:28:01,959 Speaker 1: now and they don't have the options, in part because 509 00:28:02,000 --> 00:28:05,360 Speaker 1: of their military commitments. Um, they can't cut back their 510 00:28:05,359 --> 00:28:09,320 Speaker 1: military spending because of the Syrian operations, et cetera. So 511 00:28:09,400 --> 00:28:12,680 Speaker 1: this limits their degrees of freedom. The other problems they 512 00:28:12,680 --> 00:28:15,560 Speaker 1: have is in terms of financing. With the sanctions, it's 513 00:28:15,600 --> 00:28:20,600 Speaker 1: hard for them to obtain external financing also, so in 514 00:28:20,640 --> 00:28:24,239 Speaker 1: the meantime they're using up reserves and as long as 515 00:28:24,280 --> 00:28:27,200 Speaker 1: they hold up, I guess they can keep going. How 516 00:28:27,320 --> 00:28:31,920 Speaker 1: fast are they depleting them? Well, um, they have they 517 00:28:31,960 --> 00:28:36,040 Speaker 1: have used up. Uh. They have a reserve fund which 518 00:28:36,080 --> 00:28:39,680 Speaker 1: had something like ninety billion dollars in the previously. It's 519 00:28:39,680 --> 00:28:44,160 Speaker 1: found down to below fifty billion dollars, and conceivably, if 520 00:28:44,200 --> 00:28:46,080 Speaker 1: they have a bad fiscal year this year, they could 521 00:28:46,120 --> 00:28:48,760 Speaker 1: use up the reserve fund entirely. They still have the 522 00:28:48,840 --> 00:28:53,240 Speaker 1: National Welfare Fund with with seven fifty to seventy billion dollars, 523 00:28:53,240 --> 00:28:56,360 Speaker 1: and it's depending on how you measure it. Usable fifty 524 00:28:56,400 --> 00:28:58,880 Speaker 1: billion or so, so that gives them a couple more 525 00:28:58,960 --> 00:29:02,480 Speaker 1: years of reserves to run deficits. Then they have to 526 00:29:02,520 --> 00:29:06,440 Speaker 1: balance the budget after that or paying financing someplace. If 527 00:29:06,480 --> 00:29:09,160 Speaker 1: they kept spending, that's going to reduce aggregate demand, though, 528 00:29:09,240 --> 00:29:13,840 Speaker 1: so can they Well, obviously they can just print money. 529 00:29:13,880 --> 00:29:17,080 Speaker 1: But would they be willing to do that? No? The 530 00:29:18,000 --> 00:29:21,400 Speaker 1: central Bank seems to be very determined to be an 531 00:29:21,440 --> 00:29:25,120 Speaker 1: inflation targeting bank. They just adopted. They have only been 532 00:29:25,160 --> 00:29:27,640 Speaker 1: inflation targeting for a little over a year, but they're 533 00:29:27,680 --> 00:29:29,960 Speaker 1: quite serious about it. And I don't think they're willing 534 00:29:30,000 --> 00:29:32,680 Speaker 1: to print a lot of money or or let the 535 00:29:32,680 --> 00:29:36,680 Speaker 1: the monetary side go. Um. No, I think it's up 536 00:29:36,720 --> 00:29:40,600 Speaker 1: to the fiscal to somehow adjust itself to the new reality. 537 00:29:40,640 --> 00:29:43,920 Speaker 1: Can One of the questions rattling around the global energy 538 00:29:43,960 --> 00:29:46,840 Speaker 1: markets is whether Russia would be willing to cut back 539 00:29:46,880 --> 00:29:52,320 Speaker 1: on its oil production in order to drive the price higher. Yes, 540 00:29:52,440 --> 00:29:55,600 Speaker 1: that's a that's a question that's sitting out there. Um. 541 00:29:55,880 --> 00:29:58,840 Speaker 1: I think at the governmental level they're they're certainly considering 542 00:29:58,920 --> 00:30:03,280 Speaker 1: this because if h IF combined actions can raise oil 543 00:30:03,280 --> 00:30:07,240 Speaker 1: prices to obviously improve their fiscal situation, even with some 544 00:30:07,520 --> 00:30:11,800 Speaker 1: small cutbacks. However, it's not easy to coordinate with with 545 00:30:12,000 --> 00:30:16,959 Speaker 1: the somewhat private sector oil producers that exist in Russia, 546 00:30:16,960 --> 00:30:20,959 Speaker 1: it wouldn't be easy to bring this about. Daniel Hewitt 547 00:30:21,080 --> 00:30:25,920 Speaker 1: is Barclay's senior Emerging Europe and Midle East economists. Will 548 00:30:25,920 --> 00:30:31,200 Speaker 1: continue our conversation here as we follow the markets lower today, 549 00:30:31,280 --> 00:30:35,800 Speaker 1: including the Russian stock markets. The RTS is down by 550 00:30:36,080 --> 00:30:38,880 Speaker 1: almost four percent on the day, the misex off by 551 00:30:38,960 --> 00:30:41,560 Speaker 1: two percent, and that's not different from what we're seeing 552 00:30:41,600 --> 00:30:44,360 Speaker 1: around the world. The stock to six in Europe is 553 00:30:44,400 --> 00:30:47,880 Speaker 1: down three percent, the Footsie is off by two percent, 554 00:30:48,000 --> 00:30:50,520 Speaker 1: the Dax is off by two percent, the check forty 555 00:30:50,680 --> 00:30:54,920 Speaker 1: Carol Kak is off by three point four percent, and 556 00:30:55,000 --> 00:30:58,880 Speaker 1: in the US, US futures are lower by one point 557 00:30:58,920 --> 00:31:03,200 Speaker 1: seven percent for SMP futures, one point seven percent for 558 00:31:03,280 --> 00:31:06,840 Speaker 1: DOWN futures, and one for NASDAC future. So not a 559 00:31:06,880 --> 00:31:10,600 Speaker 1: pretty outlook of the Russian ruble. Seventy nine point seven 560 00:31:10,680 --> 00:31:14,600 Speaker 1: six one is down by six tenths today against the dollar. 561 00:31:15,280 --> 00:31:22,360 Speaker 1: This is Bloomberg surveillance on Bloomberg Radio. Bloomberg Surveillance brought 562 00:31:22,360 --> 00:31:23,840 Speaker 1: to by Tito Computing, a new kind of I T 563 00:31:24,000 --> 00:31:27,120 Speaker 1: solutions company for workflow, mobility and infrastructure. Let them explain 564 00:31:27,160 --> 00:31:29,560 Speaker 1: how their expertise can help you gain greater business value. 565 00:31:29,840 --> 00:31:38,080 Speaker 1: Visit T two computing dot com for more information. Global 566 00:31:38,160 --> 00:31:41,560 Speaker 1: business news twenty four hours a day. If Bloomberg dot com, 567 00:31:41,760 --> 00:31:44,640 Speaker 1: the radio plus mobile app and on your radio. This 568 00:31:45,000 --> 00:31:48,280 Speaker 1: is a Bloomberg Business flash and I'm Karin Moscow. This 569 00:31:48,400 --> 00:31:50,960 Speaker 1: updates brought to you by Sector Spider a t F S. 570 00:31:51,120 --> 00:31:52,960 Speaker 1: I buy a single stock when you can invest in 571 00:31:52,960 --> 00:31:56,640 Speaker 1: the entire sector. Visits sector spd r S dot com 572 00:31:56,720 --> 00:32:01,200 Speaker 1: or call Sector e t F Tumble Banks leading European 573 00:32:01,280 --> 00:32:04,120 Speaker 1: stock store their lowest in September twenty th and U 574 00:32:04,240 --> 00:32:07,840 Speaker 1: S stock index futures are indicating a lower open. This 575 00:32:08,000 --> 00:32:10,960 Speaker 1: after Federal Reserve Chair Jenny Yellen's interest rate comments failed 576 00:32:10,960 --> 00:32:14,000 Speaker 1: to inspire lasting gains. We checked the markets every fifteen 577 00:32:14,040 --> 00:32:17,120 Speaker 1: minutes throughout the trading day. On Bloomberg, SNP E mini 578 00:32:17,160 --> 00:32:20,360 Speaker 1: futures down thirty three points, DOWIE mini futures down two 579 00:32:20,800 --> 00:32:23,960 Speaker 1: eighty and NASDAC E mini futures are down seventy nine decks. 580 00:32:24,000 --> 00:32:27,720 Speaker 1: In Germany's down two point four percent, Tenure treasury is 581 00:32:27,960 --> 00:32:31,080 Speaker 1: up one They yield one point five five percent they 582 00:32:31,160 --> 00:32:34,080 Speaker 1: yield on the two year point five nine percent. Nimex 583 00:32:34,120 --> 00:32:36,400 Speaker 1: screwed oil down three and a half percent or ninety 584 00:32:36,400 --> 00:32:38,959 Speaker 1: six cents to twenty six dollars, fifty cents of barrel 585 00:32:39,200 --> 00:32:41,600 Speaker 1: comes gold up three and a half percent or forty 586 00:32:41,600 --> 00:32:44,600 Speaker 1: one dollar seventy cents to twelve thirty six thirty. Announced 587 00:32:45,080 --> 00:32:48,080 Speaker 1: the euro a dollar thirteen twenty five again one twelve 588 00:32:48,200 --> 00:32:53,280 Speaker 1: point one three milen, down more than thirteen percent this morning, 589 00:32:53,360 --> 00:32:55,640 Speaker 1: this after it shelled out about seven point two billion 590 00:32:55,680 --> 00:32:59,360 Speaker 1: dollars to buy Swedish drugmaker Meta, and that's a bloomberg 591 00:32:59,400 --> 00:33:02,600 Speaker 1: business fly Ash Tom and Mike Karen, thank you very much. 592 00:33:02,640 --> 00:33:07,240 Speaker 1: One other market note to the ruble trading at seven 593 00:33:07,760 --> 00:33:10,080 Speaker 1: down almost seven tenths of a percent on the day. 594 00:33:10,120 --> 00:33:14,760 Speaker 1: We're talking about the Russian economy with Daniel Hewitt. He's 595 00:33:14,800 --> 00:33:18,640 Speaker 1: Barkley's senior e m e. A economist, and we were 596 00:33:18,680 --> 00:33:22,200 Speaker 1: talking about the difficult choices ahead of President Putin given 597 00:33:22,840 --> 00:33:25,520 Speaker 1: the economic conditions there, in the fact that oil prices 598 00:33:25,560 --> 00:33:29,640 Speaker 1: continued dropping. What's your base case scenario. Are they going 599 00:33:29,680 --> 00:33:34,800 Speaker 1: to maintain strict budget constraints or do they abandon budgetary discipline? 600 00:33:35,280 --> 00:33:38,440 Speaker 1: As the election approaches in two thousand and eighteen raised 601 00:33:38,440 --> 00:33:44,080 Speaker 1: salaries and pensions and risk and inflationary spiral. Well, first 602 00:33:44,080 --> 00:33:46,400 Speaker 1: of all, they have two elections, so they have at 603 00:33:46,440 --> 00:33:49,040 Speaker 1: this fall they have parliamentary elections, and then in two 604 00:33:49,280 --> 00:33:53,440 Speaker 1: thousand eighteen in the in February they had presidential elections. 605 00:33:53,480 --> 00:33:56,720 Speaker 1: So they're obviously focused on parliamentary elections and they're a 606 00:33:56,760 --> 00:34:02,280 Speaker 1: lot closer. Even though the Putants porters have a strong majority, 607 00:34:02,520 --> 00:34:06,920 Speaker 1: there's still under more pressure. Putin's popularity has has been 608 00:34:07,000 --> 00:34:11,120 Speaker 1: maintained very high levels, but his parliamentary groups not as strong, 609 00:34:11,800 --> 00:34:15,719 Speaker 1: and so they would certainly like to do something to 610 00:34:16,160 --> 00:34:19,680 Speaker 1: increase the government's popularity. But I think their degrees of 611 00:34:20,000 --> 00:34:23,680 Speaker 1: freedom are extremely limited at this time, and I think 612 00:34:23,680 --> 00:34:27,040 Speaker 1: that they will will they will come down in favor 613 00:34:27,120 --> 00:34:30,520 Speaker 1: of fiscal discipline rather than populist policies at this moment, 614 00:34:31,040 --> 00:34:33,759 Speaker 1: because I think they risk a lot bigger problem if 615 00:34:33,800 --> 00:34:37,040 Speaker 1: they let the fiscal go. Well, we know that Russia 616 00:34:37,080 --> 00:34:40,359 Speaker 1: has a big geopolitical impact on the world these days, 617 00:34:40,440 --> 00:34:44,640 Speaker 1: but what about economic um on the world, on emerging markets, 618 00:34:44,680 --> 00:34:48,280 Speaker 1: on the rest of Europe. This is a big country, 619 00:34:48,320 --> 00:34:53,880 Speaker 1: not necessarily a big economy. It's a big country, um, 620 00:34:53,920 --> 00:34:57,120 Speaker 1: But I would say at this point there impact on 621 00:34:57,160 --> 00:35:00,560 Speaker 1: the world economy is fairly limited in the that um, 622 00:35:00,600 --> 00:35:03,400 Speaker 1: their their trade volumes have dropped quite a bit, that 623 00:35:03,560 --> 00:35:07,360 Speaker 1: I do as their export revenues have fallen, their imports 624 00:35:07,360 --> 00:35:11,759 Speaker 1: have fallen enormously in reaction to that. So there are 625 00:35:11,880 --> 00:35:13,799 Speaker 1: less and less of an impact on the economy. I 626 00:35:13,800 --> 00:35:17,080 Speaker 1: would say they're they're kind of a bit isolated. Certainly 627 00:35:17,160 --> 00:35:20,839 Speaker 1: they affect the other CIS countries quite a bit. All 628 00:35:20,960 --> 00:35:23,640 Speaker 1: they're all suffering. I hope you're glued to your Bloomberg today. 629 00:35:23,640 --> 00:35:25,080 Speaker 1: And I mean there's any number of ways to go 630 00:35:25,120 --> 00:35:28,360 Speaker 1: on data. Sometimes what I find in Hewitt is what 631 00:35:28,680 --> 00:35:31,879 Speaker 1: is not moving is just as important as what is moving. 632 00:35:31,880 --> 00:35:34,760 Speaker 1: For example, folks, the ten year yield in eleven basis 633 00:35:34,760 --> 00:35:37,960 Speaker 1: points at one fifty six US tenure yield is just 634 00:35:38,040 --> 00:35:41,400 Speaker 1: jaw dropping, daniit what's not moving as the Russian ruble. 635 00:35:41,800 --> 00:35:45,520 Speaker 1: If I EXTRAPP like Brent and certainly West Texas Intermediate, 636 00:35:46,000 --> 00:35:47,839 Speaker 1: I ought to be at a dollar ruble of eight 637 00:35:47,960 --> 00:35:51,920 Speaker 1: two eighty three whatever I'm not. Do you just assume 638 00:35:52,040 --> 00:35:56,040 Speaker 1: that's a use of reserves to support the ruble? No 639 00:35:56,560 --> 00:35:59,279 Speaker 1: I don't think there's any use of reserves whatsoever. What 640 00:35:59,440 --> 00:36:02,160 Speaker 1: I think is that you don't have a wonder one 641 00:36:02,160 --> 00:36:05,000 Speaker 1: parody between oil price changes in the Rube. I mean, 642 00:36:05,040 --> 00:36:07,680 Speaker 1: this has existed for a while, and this is natural. 643 00:36:07,760 --> 00:36:11,040 Speaker 1: It's the the oil price. Oil is not the only 644 00:36:11,080 --> 00:36:14,480 Speaker 1: thing that affects the Russian economy. There's other factors too, 645 00:36:14,920 --> 00:36:17,520 Speaker 1: and so I think it puts some restraints on the 646 00:36:17,600 --> 00:36:20,600 Speaker 1: Rube movements. The other thing is is to realize that 647 00:36:21,560 --> 00:36:23,719 Speaker 1: the rule is very much affected by the amount of 648 00:36:23,760 --> 00:36:27,000 Speaker 1: liquidity that the central Bank puts out, and they've been 649 00:36:27,200 --> 00:36:30,960 Speaker 1: very very restrained, and they've tried to lean against UH 650 00:36:32,000 --> 00:36:34,600 Speaker 1: exchange rate movements in Russia, and I think are having 651 00:36:34,640 --> 00:36:38,440 Speaker 1: some success. So so they think that I think I 652 00:36:38,480 --> 00:36:41,040 Speaker 1: think there's probably more confidence in the central Bank than 653 00:36:41,080 --> 00:36:44,080 Speaker 1: existed before. I think for the last year they've they've 654 00:36:44,120 --> 00:36:48,600 Speaker 1: acted pretty intelligently and I think have that that situation 655 00:36:48,680 --> 00:36:53,000 Speaker 1: under control to some extent. What about the rest of 656 00:36:53,040 --> 00:36:56,920 Speaker 1: Europe UH and the smaller countries in your question, not 657 00:36:57,080 --> 00:37:02,480 Speaker 1: just not just Russia, but with oil prices falling, do 658 00:37:02,560 --> 00:37:04,960 Speaker 1: they benefit from that in a way that the Russians 659 00:37:04,960 --> 00:37:09,960 Speaker 1: as producers do not exactly all the all Eastern European 660 00:37:10,000 --> 00:37:14,160 Speaker 1: countries are benefiting from improved current account balances because of 661 00:37:14,239 --> 00:37:17,439 Speaker 1: lower energy costs. It's been a major major factor. If 662 00:37:17,440 --> 00:37:21,600 Speaker 1: you looked at Poland and Hungary, Romania, in all cases 663 00:37:21,600 --> 00:37:24,759 Speaker 1: they've had some pretty strong improvements in that current account situation. 664 00:37:25,080 --> 00:37:28,680 Speaker 1: So what they used to have pretty pretty intrench deficits 665 00:37:28,680 --> 00:37:32,280 Speaker 1: and now they're they're nearror balance or even in some cases, 666 00:37:32,320 --> 00:37:35,359 Speaker 1: in certainly hungred case, they have pretty strong surpluses. Mike, 667 00:37:35,400 --> 00:37:37,080 Speaker 1: I'm so glad you brought this up. And then I 668 00:37:37,120 --> 00:37:39,880 Speaker 1: think you nailed it with Poland. I just put euros lotty. 669 00:37:40,360 --> 00:37:43,360 Speaker 1: We can do that on Bloomberg on Thursdays. Euros Lotti 670 00:37:43,480 --> 00:37:47,480 Speaker 1: out on Bloomberg Radio Plus. And this is the third 671 00:37:47,640 --> 00:37:52,839 Speaker 1: bout of strong euro weak Polish slotti since two thousand nine. 672 00:37:53,160 --> 00:37:57,040 Speaker 1: All the others have ended abruptly. Do you assume a 673 00:37:57,160 --> 00:38:01,759 Speaker 1: stochastic pointe abrupt and to this or is this a 674 00:38:01,760 --> 00:38:05,640 Speaker 1: new structural plane we're going to for Eastern Europe, which 675 00:38:05,680 --> 00:38:10,360 Speaker 1: is weak currency versus Germany in the Netherlands. Well, in 676 00:38:10,400 --> 00:38:14,279 Speaker 1: the case of Poland, they have got some political uncertainty 677 00:38:14,520 --> 00:38:19,359 Speaker 1: which is very much affecting the Zalati euro rate, So 678 00:38:19,680 --> 00:38:22,840 Speaker 1: that weakness represents a lot of uncertainty that they've got 679 00:38:22,920 --> 00:38:27,240 Speaker 1: a new new election in October. New government, the peace government, 680 00:38:27,680 --> 00:38:31,640 Speaker 1: and the peace is going the way of of Hungary 681 00:38:31,840 --> 00:38:35,400 Speaker 1: under Orbon and is uh and is changing changing the 682 00:38:35,440 --> 00:38:37,560 Speaker 1: way things work there quite a bit. And that's causing 683 00:38:38,239 --> 00:38:42,960 Speaker 1: lack of confidence in the institution in Poland. So that's 684 00:38:43,040 --> 00:38:45,200 Speaker 1: I think a new shift. It certainly happened in Hungary 685 00:38:45,280 --> 00:38:48,760 Speaker 1: Hungry how to ship think that previously? Now the markets 686 00:38:48,760 --> 00:38:53,439 Speaker 1: of adjustment and the the the foreign is now down 687 00:38:53,480 --> 00:38:57,719 Speaker 1: at another level, Daniel. One more, one more question is 688 00:38:57,760 --> 00:39:00,000 Speaker 1: an economist, I want to ask you a trader's quite 689 00:39:00,320 --> 00:39:03,080 Speaker 1: what's the correlation and emerging markets? Now? Is there a 690 00:39:03,120 --> 00:39:06,399 Speaker 1: tight correlation between this one, this one the other one 691 00:39:06,480 --> 00:39:10,120 Speaker 1: or not? Well, I think right now we're gonna have 692 00:39:10,160 --> 00:39:13,799 Speaker 1: to look at fundamentals and countries with strong fundamentals are 693 00:39:14,239 --> 00:39:17,319 Speaker 1: are acting a safe havens and doing better, while those 694 00:39:17,440 --> 00:39:20,400 Speaker 1: with somewhat weak fundamentals that have let things go a 695 00:39:20,480 --> 00:39:23,480 Speaker 1: little bit, they're they're suffering, they got and they're they're 696 00:39:23,520 --> 00:39:25,960 Speaker 1: highly correlated with each other. So I think you have 697 00:39:26,000 --> 00:39:29,799 Speaker 1: to break them into two groups. Um, thank you so much, 698 00:39:29,840 --> 00:39:33,520 Speaker 1: Jenuine greatly appreciate it with Barclays or senior emerging market 699 00:39:33,760 --> 00:39:36,040 Speaker 1: economists in this time of two months, Mike, I don't 700 00:39:36,040 --> 00:39:39,800 Speaker 1: even know where to go when I say equities, bonds, currencies, 701 00:39:39,920 --> 00:39:46,080 Speaker 1: commodities other than selected items are grinding now. The yen 702 00:39:46,280 --> 00:39:51,319 Speaker 1: is doing better actually over the last half hour or so. 703 00:39:51,640 --> 00:39:54,600 Speaker 1: I can't say the same about full faith and gredded paper. 704 00:39:55,160 --> 00:39:57,759 Speaker 1: I mean, it's just grinding down, lower yield, no other 705 00:39:57,800 --> 00:40:01,560 Speaker 1: way to put it there. There is extraordinary correlation today 706 00:40:01,760 --> 00:40:04,839 Speaker 1: among all asset classes. I don't know if we've mentioned gold. 707 00:40:04,920 --> 00:40:10,759 Speaker 1: Did you mentioned gold earlier? UM rocketing higher three point 708 00:40:10,840 --> 00:40:15,040 Speaker 1: four percent, It's up forty dollars to one thousand, two ninety. 709 00:40:15,080 --> 00:40:17,960 Speaker 1: We were at one thousand, eight hundred something just a 710 00:40:17,960 --> 00:40:21,160 Speaker 1: couple of days ago. So there is obviously some sort 711 00:40:21,200 --> 00:40:24,480 Speaker 1: of major concern going on in the investors minds about 712 00:40:24,600 --> 00:40:28,680 Speaker 1: what's happening in financial markets today. And then we're seeing 713 00:40:28,880 --> 00:40:32,240 Speaker 1: you know, oil fall, stocks fall along with it, bonds 714 00:40:32,360 --> 00:40:35,520 Speaker 1: rising and yields dropping, and the dollar for the most 715 00:40:35,560 --> 00:40:37,600 Speaker 1: part as falling. As you mentioned, it's a little bit 716 00:40:37,600 --> 00:40:40,080 Speaker 1: stronger against the end right now, but it's down against 717 00:40:40,120 --> 00:40:44,719 Speaker 1: the euro. Uh. The euro is at one seven, Mario 718 00:40:44,800 --> 00:40:48,880 Speaker 1: dragging cannot be happy about that? Yeah, I I well, 719 00:40:49,560 --> 00:40:51,640 Speaker 1: I I think there's that, and I just think there's 720 00:40:51,680 --> 00:40:53,960 Speaker 1: also the abrupt moves. I mean you talk about Tricia 721 00:40:54,040 --> 00:40:56,640 Speaker 1: like brutal moves as well. I mentioned Washton Ruble not 722 00:40:56,719 --> 00:40:59,719 Speaker 1: moving all that much. But we need to underscore, particularly 723 00:40:59,760 --> 00:41:02,239 Speaker 1: for the as you're just joining us worldwide, as we 724 00:41:02,320 --> 00:41:05,600 Speaker 1: go into another hour here of the show, to remind 725 00:41:05,719 --> 00:41:10,080 Speaker 1: futures negative forty without future solidly negative. We are better 726 00:41:10,120 --> 00:41:14,279 Speaker 1: than that right now. Uh, but not by much. And 727 00:41:14,320 --> 00:41:16,239 Speaker 1: I can't tell you, Mike, I can't tell you looking 728 00:41:16,280 --> 00:41:18,719 Speaker 1: at the screen where we'll be in twenty minutes, let 729 00:41:18,800 --> 00:41:22,800 Speaker 1: alone two hours. The yield structure, the two year yield 730 00:41:23,200 --> 00:41:27,719 Speaker 1: has given back, Mike all and I mean all of 731 00:41:27,960 --> 00:41:32,279 Speaker 1: the optimism of a higher rate structure seen over the 732 00:41:32,360 --> 00:41:34,719 Speaker 1: last three or four and even five months, Well, it's 733 00:41:34,760 --> 00:41:38,799 Speaker 1: just evaporative. It's interesting because we have a major risk 734 00:41:38,840 --> 00:41:41,839 Speaker 1: factor coming up at ten o'clock this morning for all 735 00:41:41,880 --> 00:41:45,320 Speaker 1: the markets with Janet Yellen. It's unlikely she'll say much different, 736 00:41:45,360 --> 00:41:49,360 Speaker 1: but you never know, and so um with with markets 737 00:41:49,480 --> 00:41:52,200 Speaker 1: uh as nervous as they are, I'm sure a lot 738 00:41:52,200 --> 00:41:54,759 Speaker 1: of people will be listening in today on BLUEBIRG Radio 739 00:41:54,760 --> 00:41:58,520 Speaker 1: and television will carry her comments, question and answer session. 740 00:41:58,560 --> 00:42:00,920 Speaker 1: She'll read the same statement question answer session. Well, it 741 00:42:01,000 --> 00:42:03,320 Speaker 1: goes through a formal data check. You need that this morning, 742 00:42:03,320 --> 00:42:05,960 Speaker 1: and we do that across the equities, bonds, currencies, commodities, 743 00:42:05,960 --> 00:42:09,319 Speaker 1: peripheral Europe, all the spreads wider. I haven't looked at 744 00:42:09,320 --> 00:42:12,160 Speaker 1: those charts, but never those peripheral Europe showing some of 745 00:42:12,160 --> 00:42:15,680 Speaker 1: the tension. Michael McKee was talking about earlier futures negative 746 00:42:15,719 --> 00:42:18,919 Speaker 1: thirty four, down futures negative to eighty four. They yield 747 00:42:18,960 --> 00:42:21,759 Speaker 1: again one point five five percent, the two year point 748 00:42:21,840 --> 00:42:24,400 Speaker 1: six zero percent thirty year bond on a chair that 749 00:42:24,440 --> 00:42:28,160 Speaker 1: hasn't been talked about two point three nine percent. West 750 00:42:28,200 --> 00:42:31,440 Speaker 1: Texas twenty six point four six, a little better than 751 00:42:31,480 --> 00:42:35,120 Speaker 1: twenty minutes ago. Brent crude threatening thirty We're not there yet, 752 00:42:35,160 --> 00:42:38,280 Speaker 1: thirty point to five, with a good four dollars spread 753 00:42:39,160 --> 00:42:42,839 Speaker 1: widening out as West Texas moves weaker than end one 754 00:42:42,920 --> 00:42:45,680 Speaker 1: twelve thirty three. Stay with us, with markets on the move. 755 00:42:45,920 --> 00:42:47,080 Speaker 1: Bloomberg surveillance