1 00:00:02,320 --> 00:00:05,720 Speaker 1: Global business news twenty four hours a day. If Bloomberg 2 00:00:05,760 --> 00:00:08,840 Speaker 1: dot com the radio plus mobile act and on your radio, 3 00:00:09,119 --> 00:00:12,840 Speaker 1: this is a Broomberg business flash and I'm Karen Moscow. 4 00:00:12,960 --> 00:00:15,040 Speaker 1: Socks are lower, with the S and P five hundred 5 00:00:15,080 --> 00:00:17,840 Speaker 1: index slipping for a second day as investors consider the 6 00:00:17,880 --> 00:00:20,920 Speaker 1: capacity of central banks to boost global growth. We check 7 00:00:21,000 --> 00:00:23,560 Speaker 1: the markets every fifteen minutes throughout the trading day. On 8 00:00:23,600 --> 00:00:26,960 Speaker 1: Bloomberg SNP five hundred down half per cent or nine points, 9 00:00:26,960 --> 00:00:29,560 Speaker 1: to twenty ten, the Dow Jones Industrial Average down four 10 00:00:29,600 --> 00:00:32,400 Speaker 1: tenths per cent or sixty one points to seventeen thousand, 11 00:00:32,440 --> 00:00:35,839 Speaker 1: one hundred sixty seven, and the NASDAC is down four 12 00:00:35,880 --> 00:00:38,520 Speaker 1: ten percent or twenty points, to forty seven twenty nine. 13 00:00:38,560 --> 00:00:40,879 Speaker 1: Ten year treasury of five thirty seconds, the yield one 14 00:00:40,880 --> 00:00:43,440 Speaker 1: point nine three percent yield on the two year point 15 00:00:43,479 --> 00:00:46,479 Speaker 1: nine five percent. Nimex screwed oil down two percent or 16 00:00:46,520 --> 00:00:49,120 Speaker 1: seventy three cents to thirty six forty seven. A barrel 17 00:00:49,320 --> 00:00:52,000 Speaker 1: comes goal down one point two percent or fifteen dollars 18 00:00:52,000 --> 00:00:54,760 Speaker 1: fifty cents at twelve twenty nine fifty and ounce. The 19 00:00:54,800 --> 00:00:57,440 Speaker 1: euro and dollar eleven oh five. The yen is at 20 00:00:57,480 --> 00:01:00,600 Speaker 1: one twelve point eight eight. Faraoh Corporate Stion, a maker 21 00:01:00,600 --> 00:01:04,040 Speaker 1: of chemicals for the manufacturing industry, recently receiving a takeover 22 00:01:04,080 --> 00:01:06,920 Speaker 1: approach from Apollo Global Management. That's according to people with 23 00:01:07,080 --> 00:01:10,360 Speaker 1: knowledge of the matter. Farrah rebuffing the initial approach, which 24 00:01:10,400 --> 00:01:13,360 Speaker 1: was made without or within rather recent weeks, that people said, 25 00:01:13,400 --> 00:01:16,920 Speaker 1: asking not to be identified as the matter isn't public. 26 00:01:18,440 --> 00:01:22,360 Speaker 1: And Valiant Pharmaceuticals plunging in early twittering as much as 27 00:01:22,480 --> 00:01:25,360 Speaker 1: this morning after it corrected its Ebada guidance lower to 28 00:01:25,480 --> 00:01:28,200 Speaker 1: six billion dollars. And that's a Bloomberg business flash, Tom 29 00:01:28,200 --> 00:01:31,080 Speaker 1: and Mike Karena. Thanks so much of Bloomberg surveillance bunched 30 00:01:31,120 --> 00:01:36,319 Speaker 1: by interactive brokers. Traders University, even experienced traders need to 31 00:01:36,360 --> 00:01:40,040 Speaker 1: keep learning. Traders University will get you up to speed 32 00:01:40,720 --> 00:01:45,400 Speaker 1: quickly with short videos, webinars, courses and more. Visit ib k, 33 00:01:45,800 --> 00:01:51,880 Speaker 1: r B dot, come slash, stay ahead. And Valiant continues 34 00:01:51,960 --> 00:01:55,440 Speaker 1: to not find a bid. Mike down right now, we 35 00:01:55,480 --> 00:01:58,760 Speaker 1: have a forty handle. Take your money it appears out 36 00:01:58,800 --> 00:02:00,760 Speaker 1: of value, put it into Arrow and the hope that 37 00:02:00,800 --> 00:02:04,160 Speaker 1: maybe they'll restart those talks with Apollo Global. Pharaoh up 38 00:02:04,360 --> 00:02:09,520 Speaker 1: about ten right now. Um, here's some interesting and exciting news. 39 00:02:09,919 --> 00:02:12,600 Speaker 1: The Canadian Prime Minister, Justin Trudeau back in the United States. 40 00:02:12,639 --> 00:02:14,640 Speaker 1: He's gonna be in New York next couple of days. 41 00:02:14,639 --> 00:02:18,040 Speaker 1: He wants to he's visiting some folks of the United Nations. 42 00:02:18,120 --> 00:02:20,760 Speaker 1: Wants to run for a seat on the United Nations 43 00:02:20,760 --> 00:02:24,839 Speaker 1: Security Council. Canada that is, but we've already given him 44 00:02:24,880 --> 00:02:29,480 Speaker 1: a seat. We we are very excited that Justin Trudeau 45 00:02:29,639 --> 00:02:33,200 Speaker 1: will be our guest at nine o'clock on Thursday, Bloomberg 46 00:02:33,240 --> 00:02:36,840 Speaker 1: Surveillance Bloomberg Go on television, John Michael Fwaite will interview 47 00:02:37,120 --> 00:02:42,360 Speaker 1: the new Prime Minister of Canada. Good so you will 48 00:02:42,400 --> 00:02:45,640 Speaker 1: not want to miss that on Thursday. David Blanchard joining 49 00:02:45,680 --> 00:02:50,079 Speaker 1: us now from Dirtmouth on austerity. Is there still austerity 50 00:02:50,120 --> 00:02:53,880 Speaker 1: out there? Danny certainly is. I'm afraid. And in the 51 00:02:54,000 --> 00:02:57,840 Speaker 1: UK we've talked that the UK chuncelor tomorrow is going 52 00:02:57,840 --> 00:03:00,320 Speaker 1: to impose a big new round about sterity as the 53 00:03:00,360 --> 00:03:05,480 Speaker 1: economy flowed. Well, they've got makes no sense, makes no 54 00:03:05,600 --> 00:03:09,200 Speaker 1: sense to me. They've got a pledge to balance the budget. 55 00:03:09,240 --> 00:03:14,120 Speaker 1: By what he's going to have to do something? You know, 56 00:03:14,520 --> 00:03:16,720 Speaker 1: he certainly has a right. Well, he certainly has a 57 00:03:16,720 --> 00:03:18,840 Speaker 1: pledge to do it with no economists, as far as 58 00:03:18,880 --> 00:03:21,480 Speaker 1: I can tell in the World's a good idea. But 59 00:03:21,600 --> 00:03:23,440 Speaker 1: he has a problem in the sense that there is 60 00:03:23,480 --> 00:03:26,079 Speaker 1: a Brexit vote that's coming, so he has to balance 61 00:03:26,200 --> 00:03:30,000 Speaker 1: that trying to make people feel good about where they 62 00:03:30,040 --> 00:03:33,160 Speaker 1: are now against the rather foolish pledge that he made 63 00:03:33,440 --> 00:03:35,760 Speaker 1: to balance the budget. And the big problem he's had 64 00:03:36,200 --> 00:03:39,680 Speaker 1: is that the forecast he made in November looked far 65 00:03:39,720 --> 00:03:42,360 Speaker 1: too optimistic. They had a set of scenarios and I 66 00:03:42,440 --> 00:03:44,560 Speaker 1: argued at the time their work case scenario was my 67 00:03:44,680 --> 00:03:48,840 Speaker 1: best case scenario. And essentially that's what's happened. Nominal GDP 68 00:03:49,080 --> 00:03:52,800 Speaker 1: got revised downward a lot, and the good news, if 69 00:03:52,800 --> 00:03:55,520 Speaker 1: he liked the kind of bubbly news he produced in 70 00:03:55,600 --> 00:03:58,160 Speaker 1: November three months ago, has now just sort of gone 71 00:03:58,200 --> 00:04:01,160 Speaker 1: up in his smoke, and he has this delicate balancing 72 00:04:01,160 --> 00:04:04,120 Speaker 1: act to do. And my suspicion is, and that it's 73 00:04:04,160 --> 00:04:06,960 Speaker 1: well cropped out, he's going to cut one point two 74 00:04:07,040 --> 00:04:10,200 Speaker 1: billion dollars from the disabled to fund tax cuts, which 75 00:04:10,240 --> 00:04:13,640 Speaker 1: is probably not very popular. David had the privilege of 76 00:04:13,640 --> 00:04:16,240 Speaker 1: sitting in your lecture at Dartmouth you when I did 77 00:04:16,279 --> 00:04:19,560 Speaker 1: something once for your good students in the Hangover community 78 00:04:19,839 --> 00:04:23,599 Speaker 1: ages ago. I believe then some of what we talked 79 00:04:23,600 --> 00:04:26,279 Speaker 1: about was in the textbooks. Most of what Mike and 80 00:04:26,360 --> 00:04:30,400 Speaker 1: I talk about now isn't in the textbooks. How seat 81 00:04:30,400 --> 00:04:34,359 Speaker 1: of the pants are our central banks at this moment? 82 00:04:35,560 --> 00:04:37,520 Speaker 1: I think that's a great question, Tom. I think I've 83 00:04:37,560 --> 00:04:39,919 Speaker 1: said to you on a few occasions. But if we 84 00:04:40,040 --> 00:04:41,960 Speaker 1: look back at what we did when we went in, 85 00:04:42,080 --> 00:04:44,839 Speaker 1: I started the Monetary Policy Committee, and we thought about 86 00:04:44,880 --> 00:04:48,120 Speaker 1: what we do and what we did to how we 87 00:04:48,160 --> 00:04:50,840 Speaker 1: went to non conventional policy and what it meant, and 88 00:04:50,880 --> 00:04:53,240 Speaker 1: we were literally they're flying by the seat of our plants, 89 00:04:53,720 --> 00:04:56,600 Speaker 1: and we always thought, well, when we have to do exit, 90 00:04:57,000 --> 00:04:59,000 Speaker 1: that's going to be very difficult. We're going to have 91 00:04:59,080 --> 00:05:02,239 Speaker 1: to look at the day eater and that's really a problem. 92 00:05:02,240 --> 00:05:03,960 Speaker 1: And people say things that they have a plan, that 93 00:05:04,000 --> 00:05:06,080 Speaker 1: said has to plan, the MPC has a plan, Well, 94 00:05:06,080 --> 00:05:09,080 Speaker 1: they actually really the plan is to follow the data. 95 00:05:09,200 --> 00:05:13,000 Speaker 1: And I have a sneaking feeling that right now looks 96 00:05:13,040 --> 00:05:16,679 Speaker 1: a lot like the turning points in two thousand and eight. 97 00:05:16,880 --> 00:05:19,120 Speaker 1: We've had very bad p M I for the UK 98 00:05:19,279 --> 00:05:22,760 Speaker 1: and the US bad retail sales numbers this morning, bad 99 00:05:22,800 --> 00:05:28,039 Speaker 1: wholesale data, which suggests that potentially we are seeing a 100 00:05:28,160 --> 00:05:31,320 Speaker 1: turning point. And of course what happens today is that 101 00:05:31,400 --> 00:05:35,240 Speaker 1: central banks can't cut rates by five basis points as 102 00:05:35,279 --> 00:05:38,159 Speaker 1: they did in oh I'm not suggesting the scale of 103 00:05:38,160 --> 00:05:41,480 Speaker 1: the shock is as high, but it certainly looks that 104 00:05:42,600 --> 00:05:46,280 Speaker 1: there are turning points going on, especially driven by the 105 00:05:46,320 --> 00:05:52,599 Speaker 1: slowing of the world's second largest economy, the government from 106 00:05:52,640 --> 00:05:54,760 Speaker 1: the what you were talking about with the the UK 107 00:05:55,400 --> 00:06:00,000 Speaker 1: government into the political campaign here pretty much any account 108 00:06:00,000 --> 00:06:02,760 Speaker 1: and this will tell you that it is not the 109 00:06:02,839 --> 00:06:06,080 Speaker 1: case that countries have to balance their budget in the 110 00:06:06,120 --> 00:06:10,800 Speaker 1: same way that families do. But on the converse side, 111 00:06:11,240 --> 00:06:18,920 Speaker 1: is there an economic advantage to having a balanced budget? Well, 112 00:06:19,000 --> 00:06:24,320 Speaker 1: certainly having credible fiscal plan makes sense, but the question, 113 00:06:24,400 --> 00:06:27,479 Speaker 1: first of all is over what time period should you 114 00:06:27,600 --> 00:06:30,920 Speaker 1: balance that budget. Countries, as you say, aren't like households. 115 00:06:31,160 --> 00:06:33,040 Speaker 1: And I remember one final work, and I won't tell 116 00:06:33,080 --> 00:06:34,880 Speaker 1: you who it was, but I was having a conversation 117 00:06:34,880 --> 00:06:37,800 Speaker 1: with a famous central banker who said that that he 118 00:06:37,880 --> 00:06:39,719 Speaker 1: thought that a balance in the budget over about a 119 00:06:39,720 --> 00:06:42,720 Speaker 1: fifteen year period was a pretty good idea. In the 120 00:06:42,839 --> 00:06:46,240 Speaker 1: UK there's a debate between the two parties about what 121 00:06:46,360 --> 00:06:49,160 Speaker 1: should you balance, and the Labor Party this week came 122 00:06:49,160 --> 00:06:52,320 Speaker 1: out and said, let's think about balancing the um that 123 00:06:52,760 --> 00:06:55,120 Speaker 1: if you like the current part of the budget over 124 00:06:55,360 --> 00:06:59,359 Speaker 1: a reasonably short period, but exclude from that spending on 125 00:06:59,480 --> 00:07:01,960 Speaker 1: in better summons, you don't have to balance that. You 126 00:07:02,000 --> 00:07:05,080 Speaker 1: can borrow money at such low rates that potentially this 127 00:07:05,120 --> 00:07:08,520 Speaker 1: will be self salancing. So there are obvious issues in 128 00:07:08,560 --> 00:07:11,600 Speaker 1: the economics about over what time period do you try 129 00:07:11,600 --> 00:07:14,880 Speaker 1: and balance budgets when when you're at the zero lower bound? 130 00:07:15,160 --> 00:07:18,120 Speaker 1: And do you include investment spending? In my view is 131 00:07:18,120 --> 00:07:21,400 Speaker 1: that you shouldn't include investment spending and fifteen years is 132 00:07:21,400 --> 00:07:25,160 Speaker 1: probably a reasonable time across a cycle or so trying balancing. 133 00:07:25,240 --> 00:07:27,640 Speaker 1: And obviously the Chance in the UK has sound out 134 00:07:27,680 --> 00:07:30,320 Speaker 1: the error of his way because he basically can't balance 135 00:07:30,360 --> 00:07:33,000 Speaker 1: the budget. Said he'd removed the deputy in a parliament 136 00:07:33,160 --> 00:07:35,720 Speaker 1: and he hasn't even removed half of it. So plans 137 00:07:35,760 --> 00:07:38,920 Speaker 1: written down the refine. But the practicalities in this world 138 00:07:38,920 --> 00:07:41,520 Speaker 1: that Tom just talked about, this is the world was 139 00:07:41,680 --> 00:07:44,880 Speaker 1: not seen. You shouldn't have silly rules when these rules 140 00:07:44,920 --> 00:07:48,280 Speaker 1: don't apply now. Um, I was just telling someone to 141 00:07:48,360 --> 00:07:52,640 Speaker 1: read Scodolski's monograph The Return of Kings, which I urge 142 00:07:52,680 --> 00:07:57,360 Speaker 1: every conservative and obviously liberal to read, and it is 143 00:07:57,480 --> 00:08:02,520 Speaker 1: so informative about when getting the foxholes. I would suggest, 144 00:08:02,600 --> 00:08:06,400 Speaker 1: professor did a large part of the Western civilization public 145 00:08:06,840 --> 00:08:09,760 Speaker 1: feels like they're in a foxhll. Mike McKee mentioned the 146 00:08:09,760 --> 00:08:13,280 Speaker 1: other day the exit polling out of Michigan eight percent 147 00:08:13,360 --> 00:08:15,400 Speaker 1: or so of the people felt that we're getting ahead 148 00:08:15,840 --> 00:08:19,320 Speaker 1: eight zero, So a lot of people are in the foxhole. 149 00:08:19,760 --> 00:08:25,480 Speaker 1: What is your Keynesian prescription that the establishment can affect 150 00:08:26,120 --> 00:08:32,719 Speaker 1: to help the people who feel like they're in a foxhole? Well, 151 00:08:33,080 --> 00:08:38,640 Speaker 1: and you got thirty seconds more monetary stimulus if you 152 00:08:38,679 --> 00:08:40,840 Speaker 1: think people have done badly in the US. In the 153 00:08:40,960 --> 00:08:44,280 Speaker 1: UK real wages about eight percent compared to the start 154 00:08:44,360 --> 00:08:47,079 Speaker 1: of the recession. So essentially what we've seen is, I mean, 155 00:08:47,360 --> 00:08:49,680 Speaker 1: on this program, we've taught endlessly about it. My view 156 00:08:49,720 --> 00:08:53,240 Speaker 1: is affected two little stimulus and the fiscal AFOA bailed 157 00:08:53,240 --> 00:08:56,000 Speaker 1: out of Kansism too soon, and that's why we have 158 00:08:56,080 --> 00:08:58,320 Speaker 1: the descent in the UK have out breath, and in 159 00:08:58,360 --> 00:09:01,560 Speaker 1: the US Trump and another gree Well, I know when 160 00:09:01,640 --> 00:09:04,120 Speaker 1: Dartmouth gets to the final four, you'll be at Houston. 161 00:09:04,200 --> 00:09:07,320 Speaker 1: But uh, Professor Blanchard, thank you? So are you marrying 162 00:09:07,320 --> 00:09:09,800 Speaker 1: any daughters this summer? Are you? Are you gonna help 163 00:09:09,840 --> 00:09:14,200 Speaker 1: the UK GDP again as you always do? I know 164 00:09:14,320 --> 00:09:19,240 Speaker 1: I always do, but not this year. David Blanchard single 165 00:09:19,360 --> 00:09:23,360 Speaker 1: handedly turning the United Kingdom from recession to globe the 166 00:09:23,480 --> 00:09:26,840 Speaker 1: economic growth with a wedding or two a few years ago. 167 00:09:26,880 --> 00:09:29,160 Speaker 1: He is at Dartmouth. Mike, We've got to look at 168 00:09:29,240 --> 00:09:32,480 Speaker 1: Valiant down three or three. That's not a you know, 169 00:09:32,520 --> 00:09:35,680 Speaker 1: you're not missed hearing me. Well here's the thing. And 170 00:09:35,800 --> 00:09:37,760 Speaker 1: you talked about stock price going up and down. Here's 171 00:09:37,920 --> 00:09:41,280 Speaker 1: a great way to think about it. In by as 172 00:09:41,320 --> 00:09:45,280 Speaker 1: of June of two thousand fifteen, last year, nine months ago, 173 00:09:45,679 --> 00:09:49,240 Speaker 1: this was a seventy six billion dollar company. It is 174 00:09:49,280 --> 00:09:55,000 Speaker 1: now a fifteen billion dollar company some sort of scale 175 00:09:55,000 --> 00:09:57,760 Speaker 1: on much A massive shout out to Cynthia Coons, who 176 00:09:57,800 --> 00:10:01,839 Speaker 1: was buried personally, came off the all to inform our 177 00:10:01,920 --> 00:10:04,360 Speaker 1: show of what you heard in the call. And Lisa 178 00:10:04,400 --> 00:10:07,480 Speaker 1: Bramo it's in get flight really looking forward to what 179 00:10:07,559 --> 00:10:10,720 Speaker 1: Max Neson we'll do with this, Mike, and I don't 180 00:10:10,720 --> 00:10:12,599 Speaker 1: do bi hold cell you know. I know there's a 181 00:10:12,640 --> 00:10:16,080 Speaker 1: whole industry for that, and other people do that. But 182 00:10:16,200 --> 00:10:20,559 Speaker 1: this has now gone over to the realm of corporate governance, 183 00:10:20,880 --> 00:10:24,920 Speaker 1: corporate finance, and almost I got to be careful here, Mike. 184 00:10:25,280 --> 00:10:28,400 Speaker 1: I don't want to say forensic accounting, but at least 185 00:10:28,600 --> 00:10:33,000 Speaker 1: academic accounting, to say to yourself what happened and still 186 00:10:33,040 --> 00:10:34,520 Speaker 1: no bid. I don't want to say we found a 187 00:10:34,520 --> 00:10:37,760 Speaker 1: bid here at seven point zero two and does seem 188 00:10:37,800 --> 00:10:39,599 Speaker 1: to have put in a bottom for the moment, But 189 00:10:39,880 --> 00:10:44,559 Speaker 1: we watch throughout the day. Tomorrow we'll be with you, Mike, 190 00:10:44,600 --> 00:10:47,280 Speaker 1: and I haven't extended what is the hour day to 191 00:10:47,320 --> 00:10:50,600 Speaker 1: morow something like that. Me and Janet we will be 192 00:10:50,600 --> 00:10:56,000 Speaker 1: here early, early, early with perspective and conversation on these 193 00:10:56,040 --> 00:10:59,280 Speaker 1: unusual times, and then we'll move one PM with Scarlet 194 00:10:59,320 --> 00:11:03,600 Speaker 1: Fou on televis Genneral Radio worldwide for our special informed 195 00:11:03,640 --> 00:11:07,880 Speaker 1: coverage of York Federal Reserve System. We are produced by 196 00:11:08,040 --> 00:11:11,240 Speaker 1: y U n can Fell. You our global technical director 197 00:11:11,280 --> 00:11:12,400 Speaker 1: of Bloomberg Surveillance