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Speaker 1: This is Bloomberg Surveillance way tech. The view that as

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Speaker 1: the fat rises rights, that removes us to liquidity from

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Speaker 1: the rest of the world. Sixty percent of global j

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Speaker 1: JP relies on US told liquidity. The bottom have basically

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Speaker 1: seen their income stagnate. Over a third of a sectory,

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Speaker 1: the Asian economies, there are the fostest growing ones in

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Speaker 1: the world, China's. Both may be slowing down, but we're

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Speaker 1: still talking about China growing at six and a half

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Speaker 1: seven percent. Bloomberg Surveillance your link to the world of economics,

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Speaker 1: finance and investment on Bloomberg Radio. Good morning everyone, Michael

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Speaker 1: McKeon Tom Kane. An interesting Wednesday, the day after the election.

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Speaker 1: Senator crew steps aside with a little bit of politics

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Speaker 1: in this our economics, finance and investment with you as well.

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Speaker 1: Challenging a DP number the market moves one point eight

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Speaker 1: zero was the yield right now of through on one

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Speaker 1: to three four or four digits one point seven seven

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Speaker 1: five to yields, lower bond prices, higher futures looking modern,

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Speaker 1: really moldy. We'll get to that in a minute. Negative

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Speaker 1: fifteen on futures, down futures negative one oh six right

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Speaker 1: now though, it is time for the four X Brief,

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Speaker 1: brought to you by Interactive Brokers, winner of f X

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Speaker 1: Weeks two thousand fifteen award for the best Retail Forex

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Speaker 1: trading platform visit I d AT I b k R

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Speaker 1: dot com slash four x. We do that, and we

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Speaker 1: do it with a euro one fifteen moments ago flighty

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Speaker 1: four x today one fractionally weaker euro, yen flat one

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Speaker 1: oh six sixty dollar, a little bit of dollar strength.

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Speaker 1: But all of this off the disruption of yesterday. Four

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Speaker 1: rex Insight today from one Michael McKee. Michael mcke jump

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Speaker 1: into our four X brief here very quickly. The idea

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Speaker 1: of emerging markets a few days in a row saggy,

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Speaker 1: and then China follows on. Well, what we had is

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Speaker 1: a couple of FETE officials suggesting that June is going

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Speaker 1: to be a live meeting, and that led the dollar

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Speaker 1: index higher and led to reaction in other places. The

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Speaker 1: Chinese reset their fixing, South Africa rand weaker as well,

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Speaker 1: and months because they want to avoid being dragged higher.

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Speaker 1: And then all the other countries in Asia you have

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Speaker 1: to kind of follow suit. You see the Malaysian ring

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Speaker 1: it down one point five where else, folks, are you

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Speaker 1: gonna get worldwide? A quote on the Malaysian Ring Ring.

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Speaker 1: I can do the one one percent if you want.

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Speaker 1: Even the rand is off one Well, okay, let's go

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Speaker 1: to the equity report on David Wilson leading off with Bugs,

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Speaker 1: Bunny and and it content is King Mr Moon visit

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Speaker 1: CBS speaking to our David Weston later today on Bloomberg Television.

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Speaker 1: But you don't begin with CBS. You begin with Time Warner.

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Speaker 1: Why is that? Well, because there up more let's start there.

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Speaker 1: And their earnings were at out late yesterday as well.

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Speaker 1: Then Time Warner up two and a half percent. Uh.

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Speaker 1: The honer of CNN, HBO and other cable channels posted

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Speaker 1: first quarter. Actually, uh, Time Warner is already out the

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Speaker 1: small my my mistake. First quarter earnings in revenue at

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Speaker 1: the Time Warner beating analysts average estimates in Bloomberg survey.

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Speaker 1: Higher ratings at CNN lead to a surge in advertising sales.

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Speaker 1: It really is a similar story at CBS. Of course,

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Speaker 1: there you have the broadcast of the Super Bowl and

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Speaker 1: the Grammy Awards spurring growth in ad sales. CBS up

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Speaker 1: one and a half percent in early trading price Line Group,

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Speaker 1: though down seven and a half percent. The online travel

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Speaker 1: company's second quarter earnings forecast trailed estimates. Price Line side

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Speaker 1: in earlier Easter this year, along with increased spending to

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Speaker 1: advertise its Booking dot Com and price line dot Com websites.

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Speaker 1: We're also seeing price lines piers fall in early trading.

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Speaker 1: Expedia down two percent, trip Advisor down three percent, and

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Speaker 1: Humanities down two percent. It's all about gap tom generally

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Speaker 1: accepted accounting principles, humanitis gap earnings were lower than estimates,

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Speaker 1: and the health ensure cut its full year gap profit forecast.

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Speaker 1: Beyond that, Aluminu down four and a half percent doll

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Speaker 1: one day gap today, you're a font of accounting wisdom. Well,

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Speaker 1: you know, people pay attention to this stuff, and they're

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Speaker 1: paying attention to Alumina as well. The shares are down

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Speaker 1: four and a half percent. First quarter oarings in revenue

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Speaker 1: at the maker of gene sequencing systems, failed to meet

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Speaker 1: an ass estimates. Aluminous second quarter forecast also came up short.

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Speaker 1: Metivation up three and a half percent. The maker of

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Speaker 1: cancer drugs was approached by Fiser about a takeover, according

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Speaker 1: to Reuter's reports, saying people familiar with the matter. Metivation

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Speaker 1: turned down and unsolicited nine point three billion dollar offer

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Speaker 1: from Francis Santa Fe last week. When you have the

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Speaker 1: inter Continental Exchange which is not making an offer, this

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Speaker 1: is Ice. Indeed, they said LC on the stock Exchange.

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Speaker 1: UH that clears the way for a takeover by Dutchen

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Speaker 1: Boys and ICE's first quarter earnings UH beat projected quickly

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Speaker 1: on the New York Stocking Change and their shares up

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Speaker 1: three and a half percent, Western Union down four percent.

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Speaker 1: The Mike Transfer Company's first quarter profit in sales failed

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Speaker 1: the meat estimate. David Wilson through the day on equity

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Speaker 1: markets and earnings. It is an honor to speak with

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Speaker 1: Charles Duma of lomber Street Research. He has been exceptionally

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Speaker 1: acute and flows in balance sheets and lethargy within the

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Speaker 1: global economy, and he joins us for an update right now,

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Speaker 1: Charles Duma, who has this right right now? Are the

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Speaker 1: currency markets telling policy makers what to do or are

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Speaker 1: they adapting to the gaming of what Janet Yellow and

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Speaker 1: company will do? Well. I think that all this really

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Speaker 1: happened is that to the the monetary people, the monetary

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Speaker 1: policy makers, most obviously in Japan, and Europe. Um, I

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Speaker 1: run out of credibility, and in any case, they're trying

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Speaker 1: to achieve objectives which are not to do with monetary

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Speaker 1: policy by monetary means, um. And then they're avoiding badly

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Speaker 1: needed structural changes in both cases. And as a result

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Speaker 1: of them running out of running out of roads really, um,

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Speaker 1: they are now sitting there at the at the mercy

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Speaker 1: really of the natural flows that which they've caused, which

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Speaker 1: in the case of both of those two economies is

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Speaker 1: a gigantic current account surplus. And so I think what

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Speaker 1: we're seeing actually is that the absence of investors worldwide

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Speaker 1: having a strong view about where things are going, the

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Speaker 1: current account creates a natural inflow which strengthens the currencies

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Speaker 1: in question. Of course, the end has gone up a

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Speaker 1: long way. The euro has gone up significantly, and we

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Speaker 1: didn't find this. Well, we were surprised by the end,

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Speaker 1: but we weren't weren't surprised by the euro. Well, did

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Speaker 1: you find it interesting that Mario Dragging took on the

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Speaker 1: Germans directly and suggested their current account surplus is a

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Speaker 1: bad sign for the global economy. Well, I mean, you know,

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Speaker 1: we've been proponents of the savings glass idea from before

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Speaker 1: the time when Bernankey took it on in early two

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Speaker 1: thousand and five. So yeah, if Drug wants to drag

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Speaker 1: the savings cut in as a reason why interest rates

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Speaker 1: are low, then of course he's perfectly correct. Um And

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Speaker 1: as the Germans and not any money on their savings

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Speaker 1: because they save too much, well let's serves them right.

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Speaker 1: They're the wrong side of the market. The magic folks

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Speaker 1: of Charles Duma is within a twenty page report, and

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Speaker 1: we will not send out the report we protect the

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Speaker 1: copyright of our guests. There will be three paragraphs that

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Speaker 1: light you up. Charles Duma. You speak of the Freedman

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Speaker 1: Kanes convergence, which is fascinating for anybody that studies economic history.

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Speaker 1: Are we migrating from equilibrium certitude of what we came

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Speaker 1: out of modern economics and the idea that the normal

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Speaker 1: state is equilibrium? And are we moving within a Milton

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Speaker 1: Friedman Maynard Keynes convergence over to the dis equilibrium as

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Speaker 1: normal that they knew in the nineteenth century. Well, I

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Speaker 1: think that is. I think that's right. I mean, the

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Speaker 1: world has always seen pretty violent cycles, and each side

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Speaker 1: called represents to shift away from equilibrium and then it

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Speaker 1: goes too far and then it swings back. And actually

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Speaker 1: this currency thing is a little bit of that, isn't it.

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Speaker 1: I mean, you've you've had the Japanese um de valley

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Speaker 1: like crazy um and they're they've shifted therefore income away

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Speaker 1: from households into business um. And that means that the

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Speaker 1: domestic demand, as we weak consumer spending in real terms

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Speaker 1: has gone down steadily under arbonomics. The weakness of imports

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Speaker 1: that results from that has been hugely reinforced by the

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Speaker 1: collapse of commodity and energy prices. And these two things

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Speaker 1: combined mean that Japanese are in huge current account surplers

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Speaker 1: so lo and behold, their currency goes up and and

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Speaker 1: the same sort of thing is happening on a much

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Speaker 1: smaller scale in the Arizone. Well, taking just Japan, there

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Speaker 1: is a difference from the eighteen hundreds, and there is

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Speaker 1: that population is no longer growing, so they don't have

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Speaker 1: the potential growth that they used to have. Well, I mean,

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Speaker 1: that's a very good point that Japan is inherently a

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Speaker 1: slow growth country. But in that situation you obviously need

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Speaker 1: much less investment, and in fact they invest more than

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Speaker 1: the United states out of their growth products. Um. And

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Speaker 1: they also save even more than they invest, So they're

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Speaker 1: saving a huge amount of money and contributing to the

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Speaker 1: same plot that the Germans do um for no obvious

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Speaker 1: purpose whatever inside their own economy. Um. And so unless

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Speaker 1: unless they're anxiously pushing their money overseas, the natural tendency

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Speaker 1: is for the exchange rate to rise so that their

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Speaker 1: economy contracts because they have a deficiency of domestic demand.

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Speaker 1: And so your your your point about demographics is spot on.

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Speaker 1: It's a crucial part of the whole thing. But what

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Speaker 1: it means is that they need to be consuming a

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Speaker 1: larger share of GDP in America is not a smaller

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Speaker 1: and in fact it's miles smaller. And it's exactly because

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Speaker 1: they they swindle their households essentially quite quickly. Here before

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Speaker 1: we when we're gonna come back with Charles Duma, the idea, Mr. Duma,

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Speaker 1: of convincing consumers to consume. Is there any point in

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Speaker 1: history where that's proven to be a fact policymakers can

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Speaker 1: order demands, suggest cajole people to consume. Well, no, there isn't.

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Speaker 1: But what what is perfectly clear in Japan is that

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Speaker 1: You've got a vast flow of income in business which

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Speaker 1: is all locked up in there and is impervious to

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Speaker 1: any kind of capital market discipline, and so it doesn't

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Speaker 1: come out and get into the hands of people who

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Speaker 1: might spend it. So the problem for consumers is not

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Speaker 1: that bating way too much. The problem is they just

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Speaker 1: don't have enough income. Let's come back Charles Duma with us.

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Speaker 1: We will continue with Mr Duma. Of course, we're gonna

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Speaker 1: check in with Blaebar and get the latest world and

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Speaker 1: national headlines. My time, Thank you very much. President Barack

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Speaker 1: Obama is traveling to Flint, Michigan, today to get an

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Speaker 1: update on how it's dealing with the problem of a

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Speaker 1: lead contamination in tap water. The White House says that

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Speaker 1: today President Obama wants to assure residents that federal help

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Speaker 1: will continue even after the media glare Subsides. Is looking

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Speaker 1: more likely that Donald Trump and Hillary Clinton will go

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Speaker 1: head to head in November. Trump's main rival, Ted Cruz

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Speaker 1: has dropped out of the race after Trump's win yesterday

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Speaker 1: in the Indiana primary. Bernie Sanders won Indiana's Democratic primary,

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Speaker 1: but Clinton now has two thousand, two hundred two delegates

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Speaker 1: to Sanders four hundred. The US continues to seek a

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Speaker 1: truce in the Syrian town of Aleppo as the violence

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Speaker 1: continues in the civil war there. Global News twenty four

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Speaker 1: hours a day, powered by our twenty four hundred journalists.

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Speaker 1: I'm Michael Barr, Mike Tom Thanks so much, Michael Barr,

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Speaker 1: Luisia Mada publishing moments ago on the U S Stock Market.

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Speaker 1: The technician Yamada says, this rally appears over from New

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Speaker 1: York Bloomberg Surveillance, cutting it down to the open bell.

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Speaker 1: Brought to you by the Jeep Grand Cherokee, the most

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Speaker 1: the industry leader. Learn more at Interactive Brokers dot com.

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Speaker 1: Slash c m E Group US sock Indix futures are

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Speaker 1: lower this morning after the SNP five hundred fell to

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Speaker 1: a three week low. Comes to be lingering concerns that

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Speaker 1: tepid global growth will weigh on the US economy. We

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Speaker 1: check the markets every fifty mess throughout the trading day

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Speaker 1: on Bloomberg SNP e Many futures down twelve points down

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Speaker 1: e many futures down eighty eight and NASA DOCU many

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Speaker 1: futures down thirty. The decks in Germany's down seven tenths

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Speaker 1: per cent. Ten. Your treasury up to thirty seconds, the

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Speaker 1: yield one point seven eight percent yield one a two

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Speaker 1: year point seven four percent non x scrude oil of

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Speaker 1: one percent or seventy nine cents to forty four or

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Speaker 1: forty four a barrel. Comax gold is down four tenths

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Speaker 1: per cent or four dollars nineties cents at twelve eighty

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Speaker 1: six eighty announced the euro and other fourteen ninety three,

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Speaker 1: the en one oh six point six zero. That's a

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Speaker 1: Bloomberg business flash. Tom and Mike Casco, thank you very much.

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Speaker 1: We're talking with Charles Duma of Lombard's treat he's the

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Speaker 1: chief economist founder there UM and we were talking about

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Speaker 1: the the the idea that things are cyclical, and Tom

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Speaker 1: and I were talking Charles during the break about how, um,

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Speaker 1: you wonder what the future of the economy is globally

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Speaker 1: uh with technology taking over, and yet you go back

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Speaker 1: and you look at you know, the same sort of thing.

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Speaker 1: Those without the skills in that new technological era also sidelined.

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Speaker 1: Are you optimistic or pessimistic that we get through this period? Well,

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Speaker 1: I'm not homistic over over the long term, because the

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Speaker 1: progress will filter through to to everyone in due course.

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Speaker 1: It's just that obviously, if you're fifty years old and

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Speaker 1: you're you've spent your lifetime as a driver, let's say,

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Speaker 1: and driver list cars come along, then you know that

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Speaker 1: could be tricky. Um. And that's that's the sort of

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Speaker 1: transition one gets in with with a major technological breaks

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Speaker 1: through in almost any circumstances, and you know that is

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Speaker 1: going to be a problem for a long time. But

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Speaker 1: alongside that, in the US you've got some a situation

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Speaker 1: where the the housing crash um and housing crisis caused

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Speaker 1: quite a lot of extra immobility of labor and therefore

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Speaker 1: lack of elasticity of response to the to the problems

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Speaker 1: of the crisis. UM specifically UM. You know, if you've

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Speaker 1: got either negative equity or very small positive equity, and

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Speaker 1: you you would need to sell up and move and

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Speaker 1: then buy a house in the new location. You can't

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Speaker 1: do that if from if if your equity is not

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Speaker 1: large enough, the down payment is too high, particularly the

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Speaker 1: price is much higher in the new locations it's likely

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Speaker 1: to be if you're moving, you know, somewhere that's booming.

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Speaker 1: And then you've got the kids who come back from

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Speaker 1: home from from college with the whole heap of student debt,

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Speaker 1: and so they kind of have to live at home,

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Speaker 1: and so they have to look for how for jobs

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Speaker 1: at home rather than wherever they might have gone otherwise.

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Speaker 1: The labor mobility is a lot less than it used

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Speaker 1: to be, and that probably means that wages have done

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Speaker 1: less well than they might have done. Are we creating

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Speaker 1: good jobs? And I don't mean just the United States,

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Speaker 1: but I mean within the developer, not not the whole world,

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Speaker 1: not emerging market, not in eleven, but within the major

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Speaker 1: economies Germany, the United Kingdom, Britain, etcetera. The United States.

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Speaker 1: Charles Dumart, are we creating quality jobs? Well, my guests

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Speaker 1: would be yes, we probably are, but we don't know

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Speaker 1: what they are. The difficulty certainly over here in England.

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Speaker 1: What what's happened is that there's been a huge rate

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Speaker 1: of migration into the country. A lot of them are

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Speaker 1: very educated people from places like Spain and Portugal where

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Speaker 1: they've had very depressed conditions because of the euro crisis,

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Speaker 1: and those guys come over here. It's at cheat to

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Speaker 1: get here and they get themselves a job in Starbucks

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Speaker 1: serving over the counter to start with them. So it

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Speaker 1: looks like very low income and very low productivity and

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Speaker 1: very little value. But of course these are educated people

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Speaker 1: who are coming into the labor force and and and

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Speaker 1: they're useful, and they've got and and they've got energy,

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Speaker 1: so there will be a good future for them, particularly

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Speaker 1: the ones that stay. And so you know, you've got

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Speaker 1: you've got a sort of big transition going on, and

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Speaker 1: a lot about big transitions at once. You've talked about

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Speaker 1: the technology, we've got this business of migration um and

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Speaker 1: you've got these these imbalances between economies and they're all

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Speaker 1: trying to get resolved all at once, and I'm afraid

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Speaker 1: it's it's just a big up people already. How is

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Speaker 1: partics playing into and the partics of the economy playing

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Speaker 1: into the Brexit vote. Well, I think it's pretty similar

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Speaker 1: over here in many ways to what you've got in

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Speaker 1: the United States, with you know, Donald Trump being popular

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Speaker 1: amongst people who feel that the world has slightly left

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Speaker 1: them behind or left them out in the cold, and

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Speaker 1: we've got i mean, the the pressure here is very

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Speaker 1: much arising from migration. We've had a substantial increase of

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Speaker 1: population in Britain, which is a crowdy place. I mean

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Speaker 1: England in particular. You can fit for England into Texas

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Speaker 1: and the population in England alone is over fifty million,

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Speaker 1: so you know, it gives you an idea and the

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Speaker 1: people are squashed in and we've got a whole lot

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Speaker 1: more coming in. And it's very good for the economy,

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Speaker 1: of course, but it also aggravates in equality because it

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Speaker 1: drives down way. He drives up land values and existing wealth,

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Speaker 1: and drives up profits. So all of those kind of

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Speaker 1: things are aggravations in the short run. Charles Charles very

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Speaker 1: valuable figure someone Charles Duma with a different perspective, a

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Speaker 1: perspective based on a different form of economics, and he's

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Speaker 1: too often hear from us with Lombard Street Research. Mike,

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Speaker 1: I am struck by reading not the minutia, the notes,

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Speaker 1: but pretty much the detail of the earnings report of

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Speaker 1: the New York Times versus Time Warner. And it is

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Speaker 1: amazing the shift in growth of delta growth, positive growth

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Speaker 1: at the top of the income statement and down the

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Speaker 1: income statement. HBO doing better and good with Game of Thrones.

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Speaker 1: They rose seven point seven in the quarter. That is

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Speaker 1: a ginormous number compared to many others, just extraordinary number.

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Speaker 1: Content is king as they say, Um, you know they're

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Speaker 1: in a different business. Yeah, they're in a different At

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Speaker 1: my point, yeah, Times what I love about what they're doing.

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Speaker 1: They don't apologize about binge watch. Do you binge watch? No,

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Speaker 1: I don't even binge Listen, John Tucker, do you binge watch?

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Speaker 1: I can't get my antenna. My antenna on the Zenith

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Speaker 1: TV when I tilted the New York Times building gets

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Speaker 1: in the way in Midtown, I can't get I can't

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Speaker 1: binge watch. If the antenna is not correct, you could

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Speaker 1: never cut the cord because you never had a quick category. Yeah. Anyways,

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Speaker 1: congratulations to Mr Bucaus. It just it's amazing what we

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Speaker 1: see in the media wars, including what we do here

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Speaker 1: at Bloomberg. Is your setting up our next guest stay

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Speaker 1: with us kinding down to the opening ball, brought to

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Speaker 1: you by the Jeep Grand Cherokee, the most awarded suv ever.

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