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Speaker 1: This is Bloomberg Surveillance. It's gonna be two years where

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Speaker 1: oil prices are gonna be half of where they work

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Speaker 1: before the correction. And that's that's a long period of time.

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Speaker 1: When the Chinese currency moves one to three percent against

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Speaker 1: the dollar, the world gets in activity. When the US

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Speaker 1: markets done well, MS and I performed, and in Paris,

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Speaker 1: where the global markets have had a week a year

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Speaker 1: MS of under performed. Bloomberg Surveillance your link to the

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Speaker 1: world of economics, finance, and investment on Bloomberg Radio. Good

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Speaker 1: morning everyone, Bloomberg Surveillance and Michael McKee and Tom Keene,

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Speaker 1: we welcome you to a five day work week, no

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Speaker 1: FED meeting. FED speakers this week. McKee will provide a

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Speaker 1: dollop of wisdom. Dudley out with headlines. Michael, did he

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Speaker 1: say anything this morning? Nothing different, basically that we're looking

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Speaker 1: at slow, steady right moves the economy demands. It may

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Speaker 1: be a live or dead meeting for the FED April seven.

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Speaker 1: What we know is we've got a live surveillance for

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Speaker 1: you through this hour. We need to start with a

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Speaker 1: four extra part the Forex Brief, brought you by Interactive

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Speaker 1: Brokers Winner of FX weeks two thousand fifteen award for

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Speaker 1: and I b k R dot Com Slash four X

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Speaker 1: the end stronger one O eight sixty three. I think

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Speaker 1: it's sort of a big deal, not one oh nine,

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Speaker 1: not one oh seven, but nevertheless, Yen strength, dollar churning

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Speaker 1: fractionly this morning. Euro stronger yen, fractionally stronger Euro. Yen

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Speaker 1: take out the dollar. Euro Yen churning a bit stronger Euro,

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Speaker 1: but under one twenty three shows a relative end strength

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Speaker 1: over the recent weeks. Sterling not moving off Brexit chat

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Speaker 1: through the weekend. Swiss franc is a little bit weak,

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Speaker 1: weaker versus ero oil is a foreign exchange item sixty

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Speaker 1: one on West Texas Intermedia down one dollar seventy four,

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Speaker 1: David Wilson providing us with with with I got it

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Speaker 1: out David three to one David Wills and with Doha

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Speaker 1: perspective absolutely yeah, and energy stocks taking a hit no

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Speaker 1: surprise given the fact that the oil producing countries met

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Speaker 1: in Doha, the capital cutter over the weekend and could

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Speaker 1: not come to an agreement on limiting supplies. Bear in

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Speaker 1: mind crewde had risen as much as sixtent in New

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Speaker 1: York trading from a low on February eleven, and it's

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Speaker 1: lower today, and so are the energy stocks. X ON

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Speaker 1: Mobile down about one and a half percent, Conical Phillips

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Speaker 1: down three percent, Marathon Oil down six percent, Chesapeake Energy

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Speaker 1: UH down about eight and a half percent in early trading.

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Speaker 1: Morgan Stanley up one and a half percent. The investment

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Speaker 1: Bank's first quarter arnings beat analysts avage estament in the

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Speaker 1: Bloomberg survey. Morgan Stanley benefited from cost cutting and a

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Speaker 1: smaller drop in stock and bond trading revenue than some

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Speaker 1: analysts predicted. You've Got Hasbro shares up four and a

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Speaker 1: half percent. The toy maker's first quarter profit exceeded ani

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Speaker 1: this highest estimate. Revenue also surpassed projections. Has Brow introduced

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Speaker 1: Disney Princess and Frozen dolls in the quarter, which spurred

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Speaker 1: the company's growth. Patsico also out with earnings and early

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Speaker 1: trading UH not much, removing the stock. First quarter profit

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Speaker 1: beat analysts estimates. As price increases in North American snacks

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Speaker 1: snack business spurred revenue growth. Will have the earnings after

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Speaker 1: the close from IBM and Netflix, so they will be

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Speaker 1: stocks to watch throughout the day. A couple of other

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Speaker 1: pieces of news. CNA Industrial up three and a half percent,

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Speaker 1: the maker of commercial and farm vehicles was raised to

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Speaker 1: buy it from Neutral Bank of America, Merrill, Lynch and

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Speaker 1: c Vent the c V E n T that's the

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Speaker 1: company named up sixty six percent. The maker of internet

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Speaker 1: based event management software for business, agreed to a one

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Speaker 1: point six five billion dollar takeover by the private equity

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Speaker 1: firm Vista Equity Partners. Was that I covered that. I mean,

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Speaker 1: to me, it was like a smaller firm taken but

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Speaker 1: you know, we look at one point six billion is

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Speaker 1: small we do. It's a case though. This is a

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Speaker 1: company that's involved in cloud computing, and there are lots

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Speaker 1: of companies that want to expand in the cloud business,

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Speaker 1: and clearly this the equity is one of them. But

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Speaker 1: David Wilson with our coverage of the equity UH markets.

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Speaker 1: Good morning everyone, Michael McKee and Tom keane UM. What's

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Speaker 1: important about speaking with Dan Albert Michael McKee is where

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Speaker 1: you run into him in New York. You run into

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Speaker 1: him with the shadows of the age of oversupply looking

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Speaker 1: down upon you. I was walking lost on Central Park self,

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Speaker 1: it's a high crime area, Mike, concause you didn't know.

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Speaker 1: And there was one d Albert, author of the Age

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Speaker 1: of Oversupply, and I thought it was telling folks that

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Speaker 1: I was speaking to Mr Albert. Um I think wrapped

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Speaker 1: around two skyscrapers that are being these ginormous skyscrapers being

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Speaker 1: constructive for people that maybe won't be there to take

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Speaker 1: the apartments. Dan is real estate in your New York

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Speaker 1: City and oversupply, Oh, I think unquestionably. You know, you

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Speaker 1: saw in the end of last quarter for the first

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Speaker 1: time we went into a period of actual declines in

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Speaker 1: Manhattan rents. We've seen slowing in growth, but we actually

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Speaker 1: went into decline. Clearly the market for luxury housing has

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Speaker 1: slowed dramatically. Uh. And when you really look at the

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Speaker 1: housing market, because we're unusual in the United States, if

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Speaker 1: not the world in which we in that we have

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Speaker 1: a very very divided market, mostly rental and about owned homes.

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Speaker 1: We you know, you have a lot of those excess

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Speaker 1: homes that are being constructed moving into the rental market,

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Speaker 1: which deprints depresses rents. If you wrote your book today,

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Speaker 1: how would it be different than when you released it?

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Speaker 1: Two years ago. Well, I think what I would do

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Speaker 1: has been a lot more time looking at the quality

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Speaker 1: of the jobs that have been created. You know, we

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Speaker 1: we talked about creating fourteen and a half million jobs

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Speaker 1: since the Natier, But when you really look at the

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Speaker 1: numbers of those six point three million jobs are low

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Speaker 1: wage and low hour jobs in retail, administrative, waste services, socialist, micron, hospitality.

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Speaker 1: Not the number one male I get. But what Mr

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Speaker 1: Albert just said there is v the incoming from people. Well,

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Speaker 1: is this a change, a trend, a stock market driven thing? Dan?

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Speaker 1: In other words, Um, how does it improve? Well, the

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Speaker 1: the only way it improves ultimately is if businesses in

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Speaker 1: the United States pick up their level of capital investment

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Speaker 1: and actually create the plants and equipment necessary to employ

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Speaker 1: more people in higher paying jobs. The truth is that

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Speaker 1: none of us want to really come up and and uh,

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Speaker 1: and face is that they're very likely to do so.

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Speaker 1: In fact, they've got no incentive to do so, given

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Speaker 1: the fact that we have this exogenous supply of labor

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Speaker 1: all over the world is willing to to to do

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Speaker 1: the manufacturing cheaply. Um and and so why would anybody

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Speaker 1: invest in a new planter or new equipment in the

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Speaker 1: United States when they can more easily source goods abroad.

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Speaker 1: And there are some offsetting factors, but one of the

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Speaker 1: one of the big issues that you know, Tom asked

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Speaker 1: me what I would write about today, I'd write about

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Speaker 1: the massive slowing in some of these emerging markets, particularly China.

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Speaker 1: UM Not only has China's GDP growth slowed, and who

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Speaker 1: knows whether or not those are dependable statistics, but more importantly,

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Speaker 1: China's inflation has grown has slowed enormously, and that was

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Speaker 1: one of the things that UM I didn't foresee in

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Speaker 1: two thousand and thirteen when I wrote the book, was

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Speaker 1: that we would not have we we would see Chinese

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Speaker 1: inflation fall to levels that you know we're in in

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Speaker 1: the one and a half percent range, which were were

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Speaker 1: typical of the developed world. And if that continues and

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Speaker 1: they don't inflate their economy, they don't inflate their wage basis,

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Speaker 1: the resolution of these of these huge gaps in wages

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Speaker 1: is going to be far off in the future. I

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Speaker 1: I looked down at it oversupply and buttressing up against

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Speaker 1: that is demand, which obviously can go either way. If

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Speaker 1: there's four outcomes to any microeconomic problem is part of oversupply,

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Speaker 1: a dearth of demand. Well, they're they're they're merry images

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Speaker 1: of each other and people do you really think they are?

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Speaker 1: Or is it to your one? Well, there's too much oversupply, Yeah,

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Speaker 1: I know, I mean everybody's out there. You know. Conventional

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Speaker 1: economists will say we have a lack of demand globally,

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Speaker 1: but it's always a lack of demand relative to something, right.

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Speaker 1: It's not that that statistic doesn't doesn't stand there on

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Speaker 1: its own. It's a it's a relative. It's a lack

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Speaker 1: of demand relative to the available supply. And the available

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Speaker 1: supply for many goods and many services is almost endless

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Speaker 1: at this point. We have a glut of labor. And

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Speaker 1: I just wrote a paper for the think tank Third

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Speaker 1: Way UH called glut. We basically takes all of the

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Speaker 1: data from my book and updates it had some additional

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Speaker 1: stuff that I hadn't considered before. But this whole notion

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Speaker 1: of having um, you know, this massive glut of labor,

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Speaker 1: productive capacity and capital. And another thing I would not

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Speaker 1: have I wouldn't have been able to write about a

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Speaker 1: couple of years ago is what happened to interest rates.

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Speaker 1: I mean, the FED stopped buying uh and and uh

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Speaker 1: and the end of QUEI is long long ago. And

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Speaker 1: yet interest rates are down to levels that we would

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Speaker 1: find comparable to the levels of of the highest level

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Speaker 1: of FET intervention. So clearly it wasn't the FED intervention

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Speaker 1: that was bringing down um interest rates. It was the

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Speaker 1: gloot of global savings. The as you say, the glut

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Speaker 1: is sort of always omnipresent. But how is it what's

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Speaker 1: the second drivative, the rate of growth? Is it slowing down?

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Speaker 1: Are we going to start seeing markets find a way

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Speaker 1: to clear this? Well, we I mean yeah, but the bigger,

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Speaker 1: the bigger clut story. Obviously, the only way to clear

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Speaker 1: it is to absorb excess and right now globally we

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Speaker 1: have excess labor. The only thing that you can do

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Speaker 1: domestically to absorb excess labor that's not being put to

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Speaker 1: use in higher paying manufacturing jobs is actually, you know,

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Speaker 1: intervene on the fiscal side and have government step in

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Speaker 1: and start building infrastructure and putting back to work. But

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Speaker 1: we've not been able to see our way to clear

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Speaker 1: to doing that. Let's come back and talk with that.

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Speaker 1: We'll talk to Dani Albert about the view for it.

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Speaker 1: I think there's a lot of indecision coming out of

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Speaker 1: a multi first quarter in the early part of the

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Speaker 1: second quarter. About where we go from here, Dan Alpert

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Speaker 1: with us, I can't say enough. Martin Wolf adored it

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Speaker 1: as well. The age of oversupply. Mr Alpert will continue

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Speaker 1: with this future's negative nine. Now let's check in with

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Speaker 1: Michael R. And get the latest world in national headlines. Finel, Mike, Tom,

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Speaker 1: thank you very much. World leaders are offering support to

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Speaker 1: Ecuadora after a devastating earthquake over the weekend. The death

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Speaker 1: toll from the seven point eight earthquake is now at

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Speaker 1: two hundred seventy two. More than twenty dred others were injured.

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Speaker 1: U S Secretary of State John Kerry sending an email.

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Speaker 1: We stand by the people of Ecuador in this difficult

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Speaker 1: time and are ready to assist in anyway we can.

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Speaker 1: Brazilian President dil Marussef is hanging on by a thread

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Speaker 1: after the country's lower House of Congress voted in favor

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Speaker 1: of her impeachment. The sending will vote on Russef's impeachments

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Speaker 1: in the coming weeks. More than thirty one survivors of

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Speaker 1: the Boston Marathon bombings, their families and supporters will be

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Speaker 1: taking part today in the annual race. About thirty thousand

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Speaker 1: runners from contries will hit the twenty six point two

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Speaker 1: mile course. Global News twenty four hours a day. Michael

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Speaker 1: bar Mike, Tom Michael, thanks so much, Michael McKee and

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Speaker 1: Tom Keane. Do you get your weeks started? Interesting week

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Speaker 1: of international relations with Brazil and with oil coming up.

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Speaker 1: We'll speak later with the Council of Foreign Relations Shannon Neil.

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Speaker 1: This is Bloomberg Surveillance Market Drivers, brought you by Celebrity

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Speaker 1: the innovation of Lexus. Walk the red carpet and get

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Speaker 1: Flash and I'm Karen Moscow and the Bloomberg Futures Report

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Speaker 1: brought to you by Interactive Brokers and c m A Group.

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Speaker 1: If you're looking for global futures contracts with low trading costs,

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Speaker 1: more at Interactive Brokers dot com, slash c m E Group,

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Speaker 1: and we do have a headline crossing the Bloomberg confidence

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Speaker 1: among US homebuild There's little changed in April, indicating the

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Speaker 1: housing market lack momentum as the spring selly selling season

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Speaker 1: got under way. The out of report, originally set for

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Speaker 1: release at ten am Wall Street Time, obviously released a

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Speaker 1: little bit earlier. U S Dock Index futures, meanwhile, are

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Speaker 1: lower following a weekly Advanced and equities after talks between

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Speaker 1: the world's largest oil producers ended without a deal on

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Speaker 1: freezing output. SNP eveny futures down eight and a half

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Speaker 1: points down, E Many futures down sixty two, NAS DOCU

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Speaker 1: many futures down sixteen. The decks in Germany's down three

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Speaker 1: tens per cent ten Your Treasury down five thirty seconds,

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Speaker 1: the yield one point seven seven percent. Nimex screwde oil

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Speaker 1: down four point two percent or a dollar sixty five

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Speaker 1: to thirty seventy one a barrel Comex gold up seven

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Speaker 1: ten percent or seven dollars ninety cents at twelve forty

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Speaker 1: two fifty announced the euro a dollar thirteen O nine

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Speaker 1: agen one oh eight point five eight. That's a Bloomberg

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Speaker 1: business flash, Tom and Mike, thank you, Karen. Here are

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Speaker 1: the numbers on the National Association of home Builders. The

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Speaker 1: Housing market Index unchanged at fifty eight. Single family homes

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Speaker 1: fall from sixty five to sixty three, but future sales,

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Speaker 1: the confidence that sales will pick up picks up to

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Speaker 1: sixty two from s and there are more buyers out

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Speaker 1: there touring homes according to the builders. Uh, the index

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Speaker 1: at forty four from forty three. Apparently, Tom, the National

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Speaker 1: Association of home Builders accidentally released their own report early

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Speaker 1: on their website. Dan Albert is with us, of course,

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Speaker 1: he is at Westwood Capital, managing partner there. Uh, the

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Speaker 1: author of um, you know, a number of articles and

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Speaker 1: of course the book on the Oversupply of labor in

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Speaker 1: the economy. And we've been talking about how, uh how

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Speaker 1: the where supply is and I want to get a

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Speaker 1: little more granular, uh Dan, and and talk about supply

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Speaker 1: in the right industries. We have seen a lot of

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Speaker 1: talk about how we are oversupplied with factory workers we

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Speaker 1: don't need anymore, and undersupplied with computer coders. Is that

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Speaker 1: what you find as well, well, the the argument which

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Speaker 1: is put up by a lot of people, you see

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Speaker 1: it at a Silicon valley in other places, that somehow

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Speaker 1: we we lack STEM workers science workers, uh, and we're

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Speaker 1: not training them and we need to do better and

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Speaker 1: so on and so forth. So that's a really good

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Speaker 1: reason to give H one B visas and bringing people

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Speaker 1: who who will work cheaper, I think is if you

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Speaker 1: haven't been able to figure that out already from what

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Speaker 1: I've said, I think is a little specious. Um, we

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Speaker 1: we have an enormous number of STEM graduates in this country,

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Speaker 1: and and uh, and they are available, and they just

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Speaker 1: cost more than than than taking people from foreign countries.

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Speaker 1: So I don't really buy into that. And worse yet,

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Speaker 1: it's a very very tiny portion of overall employment in

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Speaker 1: this country. You know, I'll give you some granular data

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Speaker 1: that I think will knock your socks off. So here

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Speaker 1: we are in a nineteen trillion dollar economy. And I

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Speaker 1: sat down the other day and I said, well, let's

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Speaker 1: look at the half the jobs that have been created

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Speaker 1: since the recession. What are they generating for us in income,

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Speaker 1: you know, wages? Totally? I get about two hundred billion

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Speaker 1: dollars Now if that's not bad enough, because two hundred

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Speaker 1: billion dollars, you know, even though that's the bottom half,

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Speaker 1: doesn't really move the needle in a nineteen trillion dollar economy.

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Speaker 1: You have to keep in mind that for a lot

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Speaker 1: of those low wage jobs and lower our jobs, people

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Speaker 1: are coming into the labor force off of other forms

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Speaker 1: of support, long term unemployment benefits, sometimes even food stamps

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Speaker 1: and so forth. So there's there's not a true net

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Speaker 1: pickup in in spending from these jobs, even close to

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Speaker 1: the two hundred billions that I'm talking about. So, you know,

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Speaker 1: the the one of the big mysteries when it comes

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Speaker 1: to labor in this country. Everybody looks at that job

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Speaker 1: for Nations number excuse me, at the beginning of every

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Speaker 1: month when it's released, and and they scratched their heads.

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Speaker 1: Were forming all these jobs, and how come we're not

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Speaker 1: seeing a pickup in the overall economic activity? Uh? And

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Speaker 1: the answer is very very simple. You just look under

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Speaker 1: the hood, look at what those jobs are generating. Yeah,

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Speaker 1: there was a report out last week as well. Then

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Speaker 1: I'll just add into this that said that a lot

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Speaker 1: of people who are quitting their jobs and taking other

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Speaker 1: jobs are actually taking lower paying jobs, which is fascinating

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Speaker 1: to me. But time will tell when that gets researched.

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Speaker 1: I think this is profound. I mean, Mike, we could

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Speaker 1: literally stop weeks of coverage and go back and do it.

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Speaker 1: I mean, at least gold of the economic policy is

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Speaker 1: waging inequality continued. It's thirty five year rise in two

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Speaker 1: thousand and fifteen. What's your policy prescription for that? Mr Hilbert. Well,

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Speaker 1: as as I said before the break, there's there's only

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Speaker 1: one rational thing to do, and that is to take

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Speaker 1: this enormous glut. And obviously I'm not the only one

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Speaker 1: writing about this. Larry summers Bright the long people like

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Speaker 1: that been very very expressive of this view. Uh, you have,

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Speaker 1: you have a glood of global savings. It's reflected in

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Speaker 1: the markets in a very low interest rates, and clearly

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Speaker 1: that that also erodes the benefit of savings. So it

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Speaker 1: pushes people further out into the risk spectrum where there's

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Speaker 1: a lot of risk and and and unfortunately not not

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Speaker 1: a huge amount of reward um. And so so you

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Speaker 1: you now look at this situation where you have all

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Speaker 1: this cheap money slashing around. Um. We used to have

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Speaker 1: two ways of using excess capital in this world. One

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Speaker 1: was the private sector hoping that they would invest. We

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Speaker 1: discussed before the break why they're not um. And the

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Speaker 1: other one was the public sector, which is government. Uh.

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Speaker 1: And we've been through thirty years of basically denigrating the

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Speaker 1: function of government, the function of the collective agent, as

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Speaker 1: economists would put it. Uh And and and truly the

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Speaker 1: cycle of of the virtuous cycle of the flow of

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Speaker 1: capital is broken. You typically move from savings to investment,

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Speaker 1: to employment and then more spending and so on and

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Speaker 1: so forth. But unfortunately, unless that investment part happens, you're

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Speaker 1: not going to get there. Dn Olpert always thank you.

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Speaker 1: The book is The Age of Oversupply. It received beyond

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Speaker 1: kind reviews when it was released. I recommended for your

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Speaker 1: seventy nine degrees in April, beach reading or park reading,

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Speaker 1: whatever it may be, to all of you worldwide, The

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Speaker 1: Age of Oversupply. I'll try to get that out on

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Speaker 1: Social today. Mike Economic Policy Institute with data. This is

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Speaker 1: from the current population survey upper upper decile wage growth.

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Speaker 1: I'm gonna round figure it at five percent annual. It's

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Speaker 1: a little bigger than that over the last five fifteen years.

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Speaker 1: In two thousand and fifteen dollars, and it's about half

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Speaker 1: that or less than a half that. Forercentiality on scientific

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Speaker 1: I don't want to but no, but I don't think

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Speaker 1: anybody would really argue with here yea, I don't see

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Speaker 1: how we can argue with wage growth anywhere. Wage growth

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Speaker 1: is always a good thing, but it is certainly not

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Speaker 1: happening across certain deciles of the American economy. Michael McKee

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Speaker 1: and Tom Keane need to get the markets open. Bloomberg Surveillance,

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Speaker 1: we are kind of down at the opening bell. Brought

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

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Speaker 1: STUV ever at the Grand Cherokee continues to raise the

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Speaker 1: bar with it's luxurious interior and legendary four by four capability.

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Speaker 1: Driving into a local Jeep dealer today