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Speaker 1: Broadcasting Live to New York, glober to Washington, d C,

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Speaker 1: Bloomberg to Boston, Bloomberg twelve Honors, to San Francisco, Bloomberg

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Speaker 1: to the Country Series Exam Channel one nineteen, and around

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Speaker 1: the globe. The Bloomberg Radio Plus happened. Bloomberg dot Com.

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Speaker 1: This is Bloomberg Surveillance. Good morning. I'm Michael McKey, along

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Speaker 1: with Francy and Lack last seven thirty on Wall Street.

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Speaker 1: We've been talking about it all day. The Federal Reserve

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Speaker 1: meeting this afternoon. The big story in the US economy.

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Speaker 1: But lest we forget a huge earnings day, A lot

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Speaker 1: of numbers out. The number in the financial space overseas.

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Speaker 1: Barkley is a large loss, not as bad as expected.

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Speaker 1: Pretext profit falls, stock getting hammered. Banco Santander stock is

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Speaker 1: going up Beach estimates, even though net income fell five percent.

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Speaker 1: Nomira unexpectedly posting a quarterly loss first time in more

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Speaker 1: than four years nineteen point two billion yen for those

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Speaker 1: of you who can't calculate in your that's D seventy

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Speaker 1: three million dollars. Comcast reported it gained subscribers and revenue

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Speaker 1: made eighty four cents a share beat analyst projections of

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Speaker 1: seventy nine since a share Carlisle Group first quarter profit

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Speaker 1: declined seventy holdings did not appreciate as much as a

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Speaker 1: year earlier. Just out now Boeing first quarter core earnings

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Speaker 1: per share a dollar seventy four, that is lower than

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Speaker 1: the dollar eighty four consensus estimate. Although they are reaffirming

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Speaker 1: their forecast for the year. We can also mention United

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Speaker 1: Technologies adjusted earnings dollar forty seven. The forecast was for

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Speaker 1: a dollar forty sales thirteen point four billion, projection for

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Speaker 1: thirteen point two, so on balance, better than forecast earnings.

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Speaker 1: Not doing a lot for futures at the moment, SMP

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Speaker 1: futures off by six points. Now, let's bring in Michael

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Speaker 1: bar and get the latest World and National hillines. Thank

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Speaker 1: you very much, Mike. Democrat, Hillary Clinton and Republican Donald

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Speaker 1: Trump had strong nights and Tuesday's primaries. Trump won all

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Speaker 1: in the five states Pennsylvania, Maryland, Connecticut, Delaware, and Rhode Island.

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Speaker 1: Trump took a swipe at rival John Kasick. We have

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Speaker 1: millions more votes than Kasick. I mean Kasick Now, I

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Speaker 1: guess he was one and forty one. So now he's

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Speaker 1: one and forty six? Why is he here? Hillary Clinton

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Speaker 1: won four out of five, only losing in Rhode Island

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Speaker 1: to Bernie Sanders. Belgian prosecutors see a key suspect in

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Speaker 1: last November as Paris attacks that killed a hundred thirty

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Speaker 1: people has been handed over to French authority. So La

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Speaker 1: Obdus Slam was arrested in Belgium last month. Global News

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

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Speaker 1: hundred journalists more than a hundred fifty news bureaus from

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Speaker 1: around the world. I'm Michael bar Mike. Thank you time

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Speaker 1: now for the Bloomberg NBC Sports Update with John Stash,

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Speaker 1: Thanks Mike for six and ain'ts looked like would not

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Speaker 1: be the Mets night? And then everything changed. In the

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Speaker 1: seventh the un assessments pinch h three run Hertis Grandison triple,

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Speaker 1: David Wright singled Mets with four, and the seventh beat

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Speaker 1: Cincinnat four to three for their fifth win in a row,

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Speaker 1: tenth in the last twelve. Yankees never in it. At

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Speaker 1: Texas last ten one, Rangers scored six runs in the

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Speaker 1: third inning off Luis Sevrino's now oh and three with

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Speaker 1: an r A approaching seven. Yanks got just four hits

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Speaker 1: off Rangers starter A J. Griffin. NBA Playoffs Toronto trailed

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Speaker 1: by seven team by thirteen and the fourth quarter, but

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Speaker 1: rallied past Indiana one to ninete for a three two

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Speaker 1: series lead to mar De Rosen thirty four point for

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Speaker 1: the Raptors, Paul George thirty nine for the Pacers. Atlanta

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Speaker 1: all over Boston three for a three to league Clippers

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Speaker 1: host Portland. Tonight series is too to the Clippers top

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Speaker 1: two players around Blake Griffin a leg injury and Chris

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Speaker 1: paula broken hand, and no Steph Curry for Golden State

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Speaker 1: is a three one on Houston. Islanders have a second

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Speaker 1: round playoff game, first time since ninete. They'll open their

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Speaker 1: series of Tampa Bay Winston Hilly member, the Jets only

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Speaker 1: Super Bowl team has died at the age of seventy four.

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Speaker 1: The Bloomberg NBC Sports Uptade I'm John Stas, Thank you

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Speaker 1: very much. John. We're watching markets deteriora Desday features off

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Speaker 1: by forty nine points right now at one point one percent.

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Speaker 1: Apple disappoints on earnings, and we're seeing a number of

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Speaker 1: downgrades this morning from different firms. Price target UH, for example,

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Speaker 1: lowered to one twenty from one thirty five at Nomura

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Speaker 1: closed yesterday at one oh four. Now in the nineties.

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Speaker 1: This is Bloomberg Shave Alan side. Michael McKeon along with

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Speaker 1: Francine Lakwashi, is sitting in for Tom Keene, who is

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Speaker 1: somewhere out there in the world on vacation. We've noted

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Speaker 1: that he has stand in his toes and they take

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Speaker 1: dollars where he is. Will give you one more clue.

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Speaker 1: They drive on the left hand side for those of

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Speaker 1: you trying to figure out where Tom is. This morning.

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Speaker 1: Time now for the Bloomberg n j I T STEM Report,

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Speaker 1: brought to you by New Jersey Institute of Technology, investing

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Speaker 1: more than a hundred and ten million dollars a year

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Speaker 1: and applied research to solve problems and improve life. Learn

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Speaker 1: more at Stories of Innovation dot m j I T

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Speaker 1: dot d U. Here's John Tucker. Alright, let's say see

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Speaker 1: what's making news. He and science, Technology, engineering, and math.

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Speaker 1: Michael China's government armed with about three hundred thirty nine

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Speaker 1: billion dollars. That is the biggest pot of money for

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Speaker 1: startups in the world. They're trying to cultivate a bonanza

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Speaker 1: in the technology industry. The nation's economies and transition planners

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Speaker 1: are trying to reduce reliance on heavy industry and the

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Speaker 1: current shifts towards consumption and innovation. State backed funds in

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Speaker 1: China and enterprises are championing some of the biggest private

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Speaker 1: investment rounds, tapping into China's buoyant Internet's a sector for

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Speaker 1: better returns. Well, Berlin has surpassed London as Europe's top

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Speaker 1: venture capital destination. A pair of VC firms now are

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Speaker 1: poised to extend that lead even further. The city actually

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Speaker 1: eclips London last year with three point four billion dollars

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Speaker 1: pumped into German startups. That's about as five times as

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Speaker 1: much as in About seventy percent of that total went

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Speaker 1: to companies in Berlin, home of Europe's biggest startup factory,

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Speaker 1: Rocket Internet. Now to VC firms, their Project Day Ventures

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Speaker 1: and Sherry Ventures are raising significant new funds at That

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Speaker 1: is this morning's Bloomberg and g I t Stem report.

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Speaker 1: Thank you John Tucker. Well. It is a central bank day.

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Speaker 1: The Federal Reserve the Bank of Japan both going to

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Speaker 1: meet the FED expected to do nothing. The Bank of

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Speaker 1: Japan well, you heard Mickey Levy earlier on surveillance television

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Speaker 1: say he expects something big from them that could actually

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Speaker 1: see them buying stocks. David Kotok is the founder and

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Speaker 1: chief investment officer of Cumberland Advisors, and you're the perfect

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Speaker 1: one to have right now, because Mickey was suggesting and

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Speaker 1: others have as well, is that if the Bank of

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Speaker 1: Japan were to get into buying equities, they would do

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Speaker 1: it through e t f s. And your business is

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Speaker 1: buying and selling U E t F portfolios full of

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Speaker 1: E t F s. If they do that, Uh, what

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Speaker 1: could they buy that would have an impact on the

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Speaker 1: Japanese economy? Well, Mike, good morning, It's always nice to

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Speaker 1: see you. They the Japanese Central Bank has an ETF

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Speaker 1: that they use to buy a basket of stocks, a

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Speaker 1: very large basket, but not the full basket of the

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Speaker 1: Japanese market. My suspicion is they would continue with the

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Speaker 1: manner in which they are buying Japanese stocks, and they

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Speaker 1: have been enlarging that. They did tease the market with

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Speaker 1: some discussion of an exit a few years from now

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Speaker 1: and pulled that right back. My guess is that essentially

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Speaker 1: the Bank of Japan is going to be a permanent

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Speaker 1: owner of Japanese companies. I don't see how they could

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Speaker 1: ever sell. But a broad index broad index does it

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Speaker 1: include every sector? In other words, I'm trying to get

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Speaker 1: at how it helps the economy. Is this an effort

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Speaker 1: to boost companies or an effort to boost the stock prices? Well,

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Speaker 1: it boost stock prices. I mean the central bank essentially

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Speaker 1: has unlimited capacity to buy. They take inventory of stocks

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Speaker 1: off the market when they do, because they become a

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Speaker 1: permanent holder, and therefore the rest of the stock prices rise.

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Speaker 1: Second thing is they get a transmission of some positive

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Speaker 1: wealth effect out of the stock market. Now we know

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Speaker 1: that's kind of small, one or two percent conversion a year,

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Speaker 1: but there is a positive wealth effect, and they inject

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Speaker 1: more liquidity. So it's a version of que just just

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Speaker 1: like jgbs or bonds or other things. As an et

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Speaker 1: of investor, do you look at what they're buying and say, well,

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Speaker 1: I'll just buy because I know the price is going

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Speaker 1: to go up because the Bank of Japan is gonna buy.

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Speaker 1: We do. We actually use five different ETFs to get

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Speaker 1: to various combinations of things in the Japanese market. Japan

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Speaker 1: is our largest overweight in the international et F strategy

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Speaker 1: we apply. The benchmark weight is about eighteen percent, and

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Speaker 1: we have that position approximately eighteen percent currency hedged and

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Speaker 1: the excess about seven to eight percent is not currency hedged,

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Speaker 1: and so we reach all aspects of the Japanese market.

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Speaker 1: I look at the Japanese market, I see an equity

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Speaker 1: risk premium double that of the United States, with a

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Speaker 1: central bank that's stimulative, and with an economy that is

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Speaker 1: going to get an additional injection of defense spending. And

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Speaker 1: I can see defense spending in Japan rising from current

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Speaker 1: level of one percent of g d P, which has

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Speaker 1: been for decades to two and a half or three.

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Speaker 1: Their money will be spent with Japanese companies. There's an

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Speaker 1: interlocking directorate structure in those companies. I think Japan itself

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Speaker 1: is a huge bullish stock market story. And if you

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Speaker 1: look at the nature of Japan with the military activity

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Speaker 1: with China in North Korea, you can't blame Japan for

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Speaker 1: entering into a new era of rising defense expenditures. So,

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Speaker 1: as an investor in bullish on Japan, very bullish on Japan.

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Speaker 1: As a concerned citizen in the world, I don't like

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Speaker 1: what I see in the South China. See all right,

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Speaker 1: we'll continue our conversation with David Kotak. The NICK finished

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Speaker 1: down by sixty three points today, that is four tenths

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Speaker 1: of a percent. So far for the year, it is

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Speaker 1: down one nine percent, although it did rally in the

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Speaker 1: last couple of weeks, perhaps on expectation that the Bank

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Speaker 1: of Japan will do more. US futures are lower s

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Speaker 1: and p features off by five points right now two

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Speaker 1: tenths of a percent. Now features off thirty nine. That

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Speaker 1: is also a two tenths decline. The Federal Reserve decides

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Speaker 1: two pm this afternoon. Here on Blueberg Radio worldwide, bloombergs

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Speaker 1: Aveillance brought you by Mercedes Bann's outstanding offers are in full.

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Speaker 1: spring season. Does a m b USA dot com for

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Speaker 1: details Today Global business news twenty four hours a day

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Speaker 1: at Bloomberg dot com, the Radio plus Mobile Act and

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Speaker 1: on your radio. This is a Bloomberg Business Flash and

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Speaker 1: I'm Karen Moscow. This updates brought to you by American

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Speaker 1: Arbitration Association business disputes are inevitable resolved faster, but the

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Speaker 1: American Arbitration Association, the global leader in alternative dispute resolution

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Speaker 1: for over eighty five years. Learn more at a d

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Speaker 1: r dot org. Moeing reporting a one fifty six million

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Speaker 1: dollar after tax accounting loss as cost overruns for the

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Speaker 1: first refueling tankers built under a US Air Force contract

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Speaker 1: over shadowed improvements in cash flow, and the company's seven

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Speaker 1: eighties seven Dreamliner production shares are down one point seven

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Speaker 1: per cent in early trading. General Dynamics reporting profit that

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Speaker 1: beat analysts estimates on higher sales for the unit that

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Speaker 1: supplies vessels to the Navy. Comcast Glaxo smith Klin United Technologies,

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Speaker 1: an anthem also beat. Exam Works Group, which supplies independent

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Speaker 1: medical examination and other services, agree to be bought by

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Speaker 1: a unit of the private equity firm Leonard Green and

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Speaker 1: Partners for about two point two billion dollars in cash.

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Speaker 1: US Agendix futures are lower this morning after apples for

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Speaker 1: a sales dropping more than a decade stopped investor sentiment

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Speaker 1: about corporate earnings. Before a policy update by the Federal Reserve.

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Speaker 1: We checked the markets every fifteen minutes throughout the trading

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Speaker 1: day on Bloomberg SNP eveny futures down four points, Dow

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Speaker 1: E mini futures down thirty six, nasdacumuny futures down forty eight.

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Speaker 1: The decks in Germany's up four tenths per cent, ten

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Speaker 1: year treasury of five thirty seconds, the yield one point

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Speaker 1: nine zero percent. Nimex screwed oil up two percent of

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Speaker 1: eighty seven cents to forty four and ninety barrel Comex

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Speaker 1: schooled up four tens per cent or four dollars forty

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Speaker 1: cents to twelve forty seven eighty announced the euro and

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Speaker 1: dollar thirty nos six again one eleven point three five.

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Speaker 1: And that's a Bloomberg business flash. Mike and Francine, all right,

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Speaker 1: thank you very much. Karen Moscow Federal Reserve meets today,

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Speaker 1: Bank of Japan meets tonight. David Kotalk is going to

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Speaker 1: be interested in both of them. He's the chief investment

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Speaker 1: officer at Cumberland Advisors. We were talking about the Bank

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Speaker 1: of Japan and what they might do. We should, I

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Speaker 1: suppose talk a little bit about the FED and what

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Speaker 1: it won't do, but maybe what it says they're not

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Speaker 1: gonna change Well, they did change policy today, I think

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Speaker 1: everybody would fall up their chair in the market, would

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Speaker 1: fall out of bed. But how do they? Yeah, what

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Speaker 1: do they say? Do they? This is a question. Everybody says, Well,

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Speaker 1: they want to signal that they could raise raids ahead,

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Speaker 1: but do they Is there any percentage in it for

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Speaker 1: them to do anything other than get out of town

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Speaker 1: as quietly as possible. I think that's the right thing

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Speaker 1: to do. Hold the meeting with a conference call and

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Speaker 1: everybody go home because there's nothing to do, and anything

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Speaker 1: they do that de rails market expectations hurts the outcome.

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Speaker 1: So if you want to I saw you or listen

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Speaker 1: to you just a few minutes, go to a yen

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Speaker 1: dollar calculation in your head from trillions to billions, and

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Speaker 1: if you want to change that relationship abruptly, so you

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Speaker 1: have to recalculate. Let the FED do a surprise today.

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Speaker 1: Judge Cancalla said, though, that the FED has to start

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Speaker 1: preparing the markets if they want to move in June. Well,

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Speaker 1: I think there's something to that, And whether it's June

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Speaker 1: or not, I don't know. We kind of think that

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Speaker 1: will wind up a pushback to August because of the

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Speaker 1: political questions in Europe, and the FED doesn't want to

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Speaker 1: in any way try to derail or in June they

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Speaker 1: meet right before the week before the Brexit vote. While

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Speaker 1: you got Brexit vote, and now you have Spain and

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Speaker 1: you have questions about Greece, and you know the cauldron

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Speaker 1: is boiling in the European Union, and so August is

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Speaker 1: a much easier time in the calendar and so close

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Speaker 1: to the election as to get into the political elements.

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Speaker 1: Although we'll see the FED will say we don't pay

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Speaker 1: any attention to politics, but you look at the history

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Speaker 1: of it and you see that the FED doesn't do

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Speaker 1: much often before elections and does more after them in

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Speaker 1: election year. So we'll see how it goes. But if

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Speaker 1: you've had messaging, Eric rosen Grin pegged is a dog

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Speaker 1: dove for a long time now making sort of we've

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Speaker 1: got to start edging into normal raising rates mode. Charles

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Speaker 1: Evans another one dove from Chicago, doing the same thing.

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Speaker 1: We're seeing the rhetoric is changing. Well, let me ask

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Speaker 1: you this. Uh, it's been noted that the rhetoric is

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Speaker 1: changing from the bank presidents, but not from members of

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Speaker 1: the federal Reserve Board. You don't live in Washington. Uh,

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Speaker 1: do you see inflation elsewhere in the kind tree? No?

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Speaker 1: I don't. Well, I don't see inflation in the general

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Speaker 1: sense of the price levels. And we look at all

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Speaker 1: the measures of them all the time, but they are

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Speaker 1: flat up as opposed to flat to down. And depending

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Speaker 1: on the nuance, you can argue we're in the very

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Speaker 1: early stages of rising trend. And then you go around

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Speaker 1: the country and you see places where there's a building boom. Sarasota, Florida.

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Speaker 1: We have all these cranes in there. We're gonna have

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Speaker 1: five thousand dwelling units and they're selling at two million

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Speaker 1: and four million and all kinds of crazy numbers. And

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Speaker 1: you say, this is going on in a lot of places.

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Speaker 1: So are we starting some early phases of a bubble

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Speaker 1: that maybe two three years from now it really explodes.

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Speaker 1: Is there a sign? Can the Fed lean against the

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Speaker 1: wind with another quarter point hike? Can the FED funds

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Speaker 1: rate be one percent at the end of this year? Yeah?

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Speaker 1: I kind of think the answers yes, Can we get

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Speaker 1: a bubble with this new economy? I don't know, We

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Speaker 1: don't know, And we have got overheating no, we're not overheating.

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Speaker 1: But we also have another We've got a tug of

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Speaker 1: war going I call it a tug of war in

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Speaker 1: the United States is one fourth of the world. We're

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Speaker 1: trying to get interest rates up, trying to figure out

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Speaker 1: how to do it and not derail the recovery. In

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Speaker 1: another quarter of the world, we have negative rates and

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Speaker 1: they're spreading. We now have a sixth currency. Hungary went

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Speaker 1: to a negative rate is part of its policy. Now

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Speaker 1: Hungry it doesn't. It's not an earth shaking economy in size,

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Speaker 1: but this is a spreading element. So you've got a

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Speaker 1: quarter of the world positive rates, of the US trying

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Speaker 1: to go up, you've got a quarter of the world

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Speaker 1: in negative rates spreading going down, and the other half

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Speaker 1: of the world, if you inventory the other half of

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Speaker 1: the world, more are lowering rates than raising rates, which

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Speaker 1: is a downward pressure on bond pride brown yields. Now,

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Speaker 1: what does the FED do. Fed hikes a quarter, the

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Speaker 1: yield curve gets flatter. Heads hikes another quarter, the yield

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Speaker 1: curve gets even more flat. So those kinds of the

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Speaker 1: elements are very strange for monetary policy making. One area

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Speaker 1: of the world where we're seeing uh talk of additional

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Speaker 1: rate cuts. Australia. No inflation there. They actually had negative

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Speaker 1: inflation numbers for the first quarter, and the Australian dollars

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Speaker 1: now down two percent against the dollar. Um, I'm a

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Speaker 1: dollar bull. I think the FED hikes the dollar gets

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Speaker 1: stronger because I'm looking at the spreads between our US

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Speaker 1: policy rate, which is plus fifty basis points on excess

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Speaker 1: reserves deposited at the FED and negative rates on excess

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Speaker 1: reserves deposited at central banks. The marginal dollar that spread

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Speaker 1: is widening. We go up, it widens, they go down

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Speaker 1: it Why both happen? It widens twice and the power

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Speaker 1: is enormous. And then you have to say to yourself,

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Speaker 1: why about half of the excess reserves deposited the FED

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Speaker 1: are by American subsidiaries of foreign banks. Why are they

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Speaker 1: placing them there? Is that the safest place in the world.

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Speaker 1: Do you do currency exchanges and put dollars with our FED?

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Speaker 1: Does that meet your liquidity coverage ratio that you're going

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Speaker 1: to have to have in place? And the answer is yes.

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Speaker 1: So I think there's very very bizarre forces taking place

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Speaker 1: that are affecting policy. Well, speaking of very bizarre forces. Um. Now,

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Speaker 1: leave aside your personal views, but as a market participant,

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Speaker 1: do you care about what's happening in the presidential race? Well,

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Speaker 1: of course I care. I mean I would like to

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Speaker 1: see an outcome of the presidential race that allows repatriation

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Speaker 1: of foreign held trillion dollar balances converted back to dollars

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Speaker 1: and deployed in the United States. And wouldn't it be

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Speaker 1: wonderful if a portion of those funds rebuilt the infrastructure

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Speaker 1: of the country. Candidates talk about it, will they act

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Speaker 1: about it? Will the next president and the next Senate,

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Speaker 1: in the next House, whatever they look like, do it.

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Speaker 1: So that seems to me to be the major issue underway.

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Speaker 1: All you have to do is go through LaGuardia and

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Speaker 1: look at the construction underway and think about what La

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Speaker 1: Guardia has been like since Farrello Laguardi was born, And

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Speaker 1: you say to yourself, gosh, you know, if we do this,

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Speaker 1: with all the roads and bridges and airports and sewer

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Speaker 1: plants and water companies in the country, we would have

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Speaker 1: a massive reconstruction. We could financ the entire thing at

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Speaker 1: very low interest rates, and America would be so much

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Speaker 1: better off. Now there is talk will this election take

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Speaker 1: that issue and translate it and it could be funded

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Speaker 1: with the repatriation change in the tax code. David co Talk,

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Speaker 1: every the dreamer, right, why not? Let's dream all? Right?

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Speaker 1: Before we let you go, I gotta ask you a question.

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Speaker 1: I know a lot of people on Wall Street like you.

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Speaker 1: I love to get out on the nation's rivers and lakes,

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Speaker 1: the world's rivers and lakes. Is the end of April.

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Speaker 1: Where where would you want to fish right now? Well, everywhere,

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Speaker 1: in any time, any place better than another for this

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Speaker 1: time of year. You know, the teaching of the Bible

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Speaker 1: is that God gives you only so many days on

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Speaker 1: the planet, but does not count the ones you spend fishing.

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Speaker 1: We'll leave it there, David co Talk, chief invest but

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Speaker 1: officer and founder of Coverlet Advisers. Thank you for coming

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Speaker 1: in this morning, and um we'll see you out on

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Speaker 1: the river very soon, I hope. Right now, we are

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Speaker 1: looking at a bifurcation in markets. Europe's all up, US

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Speaker 1: all down. The foot Sea is up by five points,

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Speaker 1: the docks by thirty seven to California in Paris is

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Speaker 1: twelve points higher, but in the US SMP features are

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Speaker 1: off six points. That's three tenths declined, down, features down

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Speaker 1: forty two, two tenths, and NASDAC futures just continue to deteriorate.

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Speaker 1: Bad tech news from Apple and others fifty points lower

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Speaker 1: right now. One point on this is Sploomberg Radio