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Speaker 1: This is Bloomberg Surveillance. All this new communications technology means

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Speaker 1: we're spending a lot of time communicating and interacting, But

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Speaker 1: does that really make us more productive? I don't think

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Speaker 1: it necessarily does. Inflation it is probably the slowest moving

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Speaker 1: economic variable we have out there in the market. People

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Speaker 1: are rarely objective, clinical and rational, and they go to

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Speaker 1: extremes and they went from optimistic to pessist. Bloomberg Surveillance

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Speaker 1: your link to the world of economics, finance, and investment

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Speaker 1: on Bloomberg Radio. Good morning everyone, Michael McKee and Tom

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Speaker 1: Keene this Monday morning. Thrilled you with us worldwide. Don't

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Speaker 1: forget Bloomberg Radio plus Bloomberg dot Com, Crystal Clear Digital

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Speaker 1: our signal areas Serious Next sept Channel one nineteen Thrilled

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Speaker 1: You're on Serious Next time with us and also Bloomberg

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Speaker 1: twost FM Washington nine sixty de Bay Area, San Francisco

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Speaker 1: and the GORGIASA. You have a beautiful New York day.

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Speaker 1: Bloomberg eleven three. Oh, good morning. We need to look

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Speaker 1: at for in exchange for X brief brought you by

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Speaker 1: Interactive Broker's winner of FX Weeks two thousand fifteen award

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Speaker 1: for the best retail for its trading platform, visit ib at,

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Speaker 1: I b k R dot Com slash four x dollars

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Speaker 1: stronger on d X y a blend of major trading partners,

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Speaker 1: Old Line Partners not China up a solid point nine

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Speaker 1: five points nine seven point five four gets my attention.

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Speaker 1: Stronger dollar, weaker, yen one seventeen, weaker euro big weaker

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Speaker 1: Euro one ten ten, and sterling is crushed and further crushed.

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Speaker 1: Let me look at an inter day here. I'll put

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Speaker 1: this chart out on Bloomberg Radio Plus, which we can do.

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Speaker 1: I don't know if Dave Wilson knew we could do that. Yeah,

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Speaker 1: the sterling is broken down even further. Not only did

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Speaker 1: I know we can do that, but I do that

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Speaker 1: every day with my Stock of the Day at four

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Speaker 1: pm Eastern, one pm Pacific, And with that shameless plug

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Speaker 1: we're pleased to bring in on equity markets one David Wilson. David, Well,

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Speaker 1: it's another one of those days where oil setting the

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Speaker 1: tone for stocks. I mean, energy shares higher and early

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Speaker 1: trading crude oil up about a dollar. Yeah, absolutely, and

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Speaker 1: people are paying attention to that. You've got ex Mobile

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Speaker 1: up one and a half percent, Chevron up two percent,

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Speaker 1: Conico Phillips up three percent in early trading. Yeah, who's

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Speaker 1: up two and a half percent. The web portal will

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Speaker 1: begin approaching potential buyers for its main business as soon

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Speaker 1: as today. That's according to people familiar with the process.

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Speaker 1: They said Verizon, Comcast, and A T and T or

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Speaker 1: among the interested parties, along with private equity firms being

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Speaker 1: Capital KKR and TPG and Scott Galloway, I'm Bloomberg Surveillance,

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Speaker 1: and Friday was adamant there will be multiple biries. It

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Speaker 1: may well be the case. Then I should note there

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Speaker 1: are headlines out a few moments ago about the Verizon

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Speaker 1: buying XO communications fiber business for about one point eight

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Speaker 1: billion dollars. So Verison has been doing some deals, that's

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Speaker 1: for sure. We've got one earnings report out the stand

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Speaker 1: Force five today is a big one from our again.

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Speaker 1: The shares are up to percent. The drug makers fourt

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Speaker 1: corter earnings and revenue top to analysts average estimates in

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Speaker 1: the Bloomberg survey. Companies top sellers of the wrinkled treatment

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Speaker 1: Botox and the dry eye drug stasis and their sales

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Speaker 1: beat projections. Fies are seeking to buy Allagon for a

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Speaker 1: hundred and sixty billion dollars, so a plus for them.

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Speaker 1: A couple of railroad stocks higher in early trading CSX

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Speaker 1: up three percent and Union Pacific up two and a

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Speaker 1: half percent. They were both raised to buy from Neutral,

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Speaker 1: Bank of America Merrill Lynch other analysts calls of note

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Speaker 1: Express Scripts down two percent. The drug Benefit Manager was

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Speaker 1: cut to sell from hold, the Deutsche Bank Trip Advisor

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Speaker 1: down two percent, the online travel agency lower to sell

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Speaker 1: from hold. It's stifle and wild Care Health Plans up

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Speaker 1: five and a half percent. The health insurer was raised

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Speaker 1: equivalent to buy from Neutral at JP Moore Deem Foods

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Speaker 1: up three very. Product makers fourth quarter has been asked

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Speaker 1: m its first quarter profit may also come out ahead

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Speaker 1: based on the company's forecast. And lumber Liquidators down seventy

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Speaker 1: The US Centers for Disease Control and Prevention found the

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Speaker 1: retailer's flooring poses three times the cancer risk. This slowsed

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Speaker 1: earlier this month. The CDC attributed the revision to incorrect

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Speaker 1: ceiling heights. David Wilson, thank you so much. He has

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Speaker 1: wonderful degrees from Bowden College, cell Tech in Stern School.

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Speaker 1: He's the only one I know that actually understood the

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Speaker 1: science of the Martian. Uh. Jim Karen joins us from

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Speaker 1: Morgan Stanley right now on the fixed income mark. Jim,

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Speaker 1: did you see the Martian I'm looking for Jim Karen Martian? Yeah,

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Speaker 1: I thought it was pretty good science. Are we dealing

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Speaker 1: with rational science now in our fixed income market? If

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Speaker 1: our central banker have taken us through the zero bound

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Speaker 1: or to the zero bound? Are we doing science? Are

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Speaker 1: we doing alchemy? I think we're doing a grand experiment. Um.

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Speaker 1: I don't think there's a lot of science behind what's

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Speaker 1: going on right now, other than the fact that lower

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Speaker 1: rates tend to stimulate demand. So if you can push

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Speaker 1: rates towards zero, should stimulate more demand, and hey, if

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Speaker 1: you push them negative, it should stimulate even more. I

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Speaker 1: think what we're finding, though, is that negative rates aren't

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Speaker 1: what we all thought that they might be. That there

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Speaker 1: are some limitations as to how low these rates can

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Speaker 1: go before they create problems. We see in Japan for example, UM,

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Speaker 1: Japan pushed interest rates to negative levels, and that's supposed

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Speaker 1: to weaken the currency. Well, the Japanese yend has been

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Speaker 1: one of the strongest currencies out there over the past

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Speaker 1: couple of weeks, ever since they've actually moved to negative rates.

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Speaker 1: So I think this is a grand experiment, and we're

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Speaker 1: really trying to get demand to come back into the

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Speaker 1: economy by manipulating interest rates, and I don't think it's

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Speaker 1: going to work the way that they intend to. A

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Speaker 1: lot of people are saying that these days, do we

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Speaker 1: get bon vigilantes telling central banks it's not going to work. Well,

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Speaker 1: it's it's interesting right now, And I think the answer

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Speaker 1: to that is ultimately yes. But we also have to

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Speaker 1: put this into context with what's going on with the

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Speaker 1: rest of assets around the world. So equity prices have

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Speaker 1: been coming down, credit spreads have been widening. This has

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Speaker 1: been creating a lot of pain. Um so An oil

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Speaker 1: clearly has been the number one thing correlating all asset

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Speaker 1: prices together. So when people look for a hedge and

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Speaker 1: they need a hedge to hedge off these um hedge

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Speaker 1: off losses from some of these assets, what they end

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Speaker 1: up doing is buying very very high quality US treasuries, Euros,

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Speaker 1: you know, guilt your government bonds, I mean, and what

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Speaker 1: that ends up doing is it ends up pushing rates lower.

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Speaker 1: So the interest rate markets look like they're well behaved

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Speaker 1: and taking these negative rates in stride, and it's doing

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Speaker 1: what it's supposed to be doing. But the reality is

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Speaker 1: is that the other asset markets are are really you know,

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Speaker 1: the decline, and the other asset markets is really what's

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Speaker 1: driving treasuries. So I don't know that negative rates necessarily

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Speaker 1: is the best solution. However, there aren't a lot of

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Speaker 1: other good solutions right now. I think many central banks

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Speaker 1: are running out of opportunities to actually try to stimulate

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Speaker 1: the markets, which is scary in and of itself. If

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Speaker 1: we do, we still need somebody to stimulate the markets,

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Speaker 1: or would it be better, as we were talking earlier

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Speaker 1: on the show, for central banks to sort of shut

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Speaker 1: up and get out of the way. At this point,

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Speaker 1: I think, you know, I mean, ultimately, if if you

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Speaker 1: come from the Austria Austrian economic camp, then the answer

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Speaker 1: is absolutely just get out of the way and just

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Speaker 1: let the markets behave like markets. And and ultimately I

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Speaker 1: think central banks do need to step away a little

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Speaker 1: bit too to allow some of the accesses to burn off.

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Speaker 1: But there's also a lot of collateral damage that ends

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Speaker 1: up happening along the way. So you could, for example,

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Speaker 1: have you know, really good solid companies um you know,

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Speaker 1: move into higher probabilities of default and have their bond

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Speaker 1: prices go down because there's some cleansing of the overall

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Speaker 1: economic system, which could create you know, high levels of unemployment.

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Speaker 1: It could create a lot of economic unrest. So I

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Speaker 1: think central banks are have been put on this planet

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Speaker 1: to try to manage these things. I think they've overdone it. Personally,

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Speaker 1: I think they've overdone it, and I do think that

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Speaker 1: they need to step away and allow the normal financial

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Speaker 1: conditions in the marketplace to revive itself. When I look,

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Speaker 1: Karen at the derivative markets, what's happened around the headlines

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Speaker 1: on bonds? We've been here before. Interesting markets, Uh, indetermined

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Speaker 1: It was the word I use last week. What have

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Speaker 1: you observed in securitized markets? What have you observed in

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Speaker 1: shadow or derivative constructed bond markets. So, for many of

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Speaker 1: these securities markets which typically hold mortgages and you know,

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Speaker 1: or buildings as you know, commercial mortgage backed securities, commercial

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Speaker 1: mortgages as a as an asset um, the residential space

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Speaker 1: has actually been relatively strong. Residential mortgages have done very

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Speaker 1: very well, so the homeowner of the individual paying their

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Speaker 1: mortgage looking for homes, you know, home price appreciation has

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Speaker 1: gone up. Commercial mortgages, though, are a different story. Commercial

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Speaker 1: mortgages are a little bit more of a technical story

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Speaker 1: right now and often trades more like a credit and

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Speaker 1: since credit spreads has been widening, commercial mortgages, securitized assets

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Speaker 1: have actually been getting hurt. Now we're not seeing a

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Speaker 1: lot of defaults, but what we are seeing is a

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Speaker 1: repricing of of the risk premium, so higher risk premium,

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Speaker 1: lower prices. And essentially what's also happening is that there's

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Speaker 1: a lot of technicals right now where a lot of

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Speaker 1: commercial mortgage backed securities were created in oh six, oh seven,

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Speaker 1: oh eight, which is and have about a ten year maturity.

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Speaker 1: Those maturities are now coming due and need to be

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Speaker 1: rolled over, so there's a lot more supply, so I

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Speaker 1: think it's weighing on those markets. Jim Karen with us

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Speaker 1: with Mortgage Stanley, I'd really point out a smart summary

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Speaker 1: vite zero has this weekend on clos and Invit is

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Speaker 1: the collaterized loan obligation UH markets and when I when

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Speaker 1: I look at that, uh, he cites more than Stanley researcher.

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Speaker 1: And then I wanted to bring that up with Jim. Jim, Karen,

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Speaker 1: thank you so much. Way too short of visit today.

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Speaker 1: We'll do it again. Uh, next time futures up, twenty down,

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Speaker 1: futures up, will do it longer. Next time, I should say,

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Speaker 1: And again I want to note dollar strength, Mike. We're

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Speaker 1: really getting off of Sterling's weakness. Uh. Not a huge

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Speaker 1: move that would be wrong, but a very nice lift

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Speaker 1: in the X y seven point five nights, not yar

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Speaker 1: a hundred, not even nevertheless, but also not Sterling's weakness.

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Speaker 1: But the Euro at one ten oh six here threatening

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Speaker 1: one nine. It's a group efforts. Sterling one fort seventy seven. Again,

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Speaker 1: I'm Boris Johnson and Brexit news. Let's check out what

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Speaker 1: talking now. I'll get the latest world in Nashal headlines.

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Speaker 1: John and Michael and Tom. The suspect to in that

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Speaker 1: shooting rampage in Calaba's in Michigan that left six people

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Speaker 1: dead expected to be rained today on murder charges, please

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Speaker 1: say Jason Dalton seemed to choose as victims at random.

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Speaker 1: Authorities say the forty five year old uber driver and

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Speaker 1: former insurance adjuster, has no criminal record. With Jeb Bush's

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Speaker 1: departure from the presidential race on Saturday of fundraising, armies scattered,

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Speaker 1: and the question the troops now facing pick another side

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Speaker 1: of retreat, most Bush loyalist contacted Sunday say they're preparing

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Speaker 1: to support Marco Rubio. Authorities in Fiji still having trouble

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Speaker 1: communicating with some islands following a powerful and deadly cyclone

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Speaker 1: that smashed the Pacific island chain. Officially, at least eighteen

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Speaker 1: people die, thousands remaining in shelters. Global News twenty four

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

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Speaker 1: in more than one hundred fifty news bureaus around the world.

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Speaker 1: I'm John Tucker, Michael and Tom John. Thanks so much again,

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Speaker 1: As Mike McKey man should sterling weakness one forty eighty

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Speaker 1: really beginning to start thinking about a one nine handle

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Speaker 1: on cable that would be something. This is Bloomberg Surveillance

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Speaker 1: Market drivers brought you by your Mercedes Benz tri state dealer.

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Speaker 1: When it comes to winter elements, put your best four

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Speaker 1: wheels forward with Mercedes Benz Formatic all wheel drive. As

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Speaker 1: it your Mercedes Benz Tri state dealer for a test

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Speaker 1: drive today