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Speaker 1: This is Bloomberg Surveillance. We're back to what really made

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Speaker 1: this entire bull market great, which has been climbing a

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Speaker 1: perpetual wall at work. You just do what you normally

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Speaker 1: do as a human being, and you get a response

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Speaker 1: from computing. That is a new phenomenon that I think

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Speaker 1: points at the future of interfaces. Those that are bringing

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Speaker 1: that they can readjust their portfolio leaning things down are

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Speaker 1: gonna get rewarded as we look at the recouvery that

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Speaker 1: we firmly believe has started. Bloomberg Surveillance your link to

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

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Speaker 1: Good morning, everyone, Michael McKee and Tom Keane Friday, wrapping

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Speaker 1: up what has been an interesting week, particularly with what

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Speaker 1: we saw with the Japanese yen um yesterday. We're gonna

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Speaker 1: look at em and you know through the morning, try

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Speaker 1: to recalibrate into your weekend reading. I want to get

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Speaker 1: right to it now. Bloomberg Surveillance brought you by kon

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Speaker 1: Resnik Accounting tax Advisor. To minimize risk and capture value

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Speaker 1: creates results. Find out how it cone Resnec dot Com

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Speaker 1: so there we are. We say good morning, thank you

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Speaker 1: for your support. Michael McKee. I look at the week,

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Speaker 1: and I look at all that's going on, and to me,

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Speaker 1: it all devolves back to a lack of nominal GDP,

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Speaker 1: tepid price change, and even tepid real g d P

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Speaker 1: as well. Last night, down Greenspan at the at the

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Speaker 1: Fed Chairs Panel suggested that is all based on the

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Speaker 1: lack of productivity growth in the United States and around

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Speaker 1: the world, and that that is the issue that policymakers,

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Speaker 1: particularly on the fiscal side, should pay attention to. If

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Speaker 1: you can get companies to invest to increase productivity, you

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Speaker 1: can increase growth at a time when the population, the

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Speaker 1: working the labor force is shrinking. Um as any number

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Speaker 1: of ways to go with this. I am thrill that

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Speaker 1: we have on Pablo Goldberg of Black Rock, who is

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Speaker 1: in an arcane world of emerging market debt strategy. That

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Speaker 1: alone is enough to bring a bar conversation to a

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Speaker 1: complete halt. Unfortunately, I would suggest, respectfully, Pablo Goldberg's world

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Speaker 1: is really, really, really important right now. Pablo, I'm in

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Speaker 1: the mood where I've seen this before. You never know

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Speaker 1: what's coming, but everybody hearkens back to one of the

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Speaker 1: skeletons in the closet. Let me start with not rumors

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Speaker 1: or speculation, but I've had a few people go Malaysia

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Speaker 1: and they're talking about the debt construction of your emerging markets.

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Speaker 1: Is there any validity to major worries about e M debt. Yeah,

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Speaker 1: there's there is some uh, some some ability to to that.

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Speaker 1: And and and the abalidity uh comes more from the

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Speaker 1: fut that him has been accummolating that over the course

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Speaker 1: of the last year's and is way more highly leveraged

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Speaker 1: than it was before. But it's also striking difference in

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Speaker 1: in eighteen ninety four. First, you know, the cost of

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Speaker 1: the shock in him was a surprising fed and I

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Speaker 1: said that was waking way very quickly. The second that

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Speaker 1: the dead there was constructive in energy market at the

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Speaker 1: time was mostly be nominated in dollars. That is not

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Speaker 1: the case right now. Um. So, while it is true

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Speaker 1: to say that anergy market are more had embedded ptgraination

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Speaker 1: that it were before the globe of another crisis, the

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Speaker 1: astronomy of that that is very very different than that

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Speaker 1: at nineteen four. Well are you not you? But the

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Speaker 1: emerging markets are they happy that the dollar has gotten

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Speaker 1: weaker over the last couple of weeks. Isn't enough that

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Speaker 1: it takes the pressure off? Yes? Absolutely. I mean the

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Speaker 1: the stronger dollar was a very important headwind facing the

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Speaker 1: emerging markets because it's not just about the stronger dollar.

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Speaker 1: Was about what the stronger dollar was doing to the

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Speaker 1: currency of China and how China has decided to change

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Speaker 1: its affectual gim uh. It was about what the dollar

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Speaker 1: was doing to commodity prices and how low they have gotten.

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Speaker 1: So this relief that we've seen on on the dollar,

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Speaker 1: on the dollar strength is very much welcome for emerging market.

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Speaker 1: I would argue that it actually has led to a

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Speaker 1: significant rally that could be sustained. I mean this, this

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Speaker 1: headwind of the dollar could eventually turn into some pail

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Speaker 1: winds for emerging market. But the stimula that we see

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Speaker 1: coming out of China then generates some new growth in

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Speaker 1: the Asian giant that will permit to the rest of

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Speaker 1: the him as well as a little bit of it

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Speaker 1: pick up in commodities, as well as some room for

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Speaker 1: emerging marketenter vast kind right, Pablo percolating and folks had

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Speaker 1: just been percolating literally in the weekend reading, whether it's

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Speaker 1: the Economist magazine or Bloomberg product or whatever, is the

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Speaker 1: idea of just do something. And this is the G

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Speaker 1: seven meetings coming up in Japan, in the i m

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Speaker 1: F Spring meetings as well. Pablo, are we anywhere near

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Speaker 1: coordinated or less coordinated fiscal stimulus? But we can say

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Speaker 1: that in some way we're already past coordinated monetary stimus right,

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Speaker 1: And you see what has happened in it in the

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Speaker 1: last meetings on the set that you cv in the bandage.

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Speaker 1: But they were canna argue whether that was voluntary or not.

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Speaker 1: But the idea is that we had a way better

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Speaker 1: monetary out look for a corner. Now I was going

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Speaker 1: to get a better sort of coordination on the fiscal side.

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Speaker 1: That's a little bit more tricky. Remember that it's still

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Speaker 1: in Europe. We're deleveraging as to some extent with the

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Speaker 1: leveraging the US. Here, what we need in the developed

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Speaker 1: world is a real leveraging of the private sector. And

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Speaker 1: that is what more that a policy is trying to

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Speaker 1: do um but higher spending on the public side. I

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Speaker 1: do not don't think that that is something that we

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Speaker 1: can bet on from now, all right, so the FED

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Speaker 1: on hold at the moment, uh and we don't know

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Speaker 1: when they're going to get back to raising rates. But

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Speaker 1: have we normalized enough, gotten the rally back into place

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Speaker 1: that you're talking about enough that if the Fed uh

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Speaker 1: an interest rate increase does come to the four again,

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Speaker 1: we don't see another collapse in e M. I think

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Speaker 1: that that is fair to say, particularly if we increase

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Speaker 1: in interest rates in the US come as a response

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Speaker 1: of stronger growth. We need the US to accelerate now

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Speaker 1: if it comes because we're starting to see inflation of

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Speaker 1: pressures creeping in the US. That's all of a different story.

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Speaker 1: That is look more nighting than the forage, than than

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Speaker 1: than anything else. But you know, it is not something

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Speaker 1: that is very much on the table and something that

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Speaker 1: would more touring as a potential risk, but it's not

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Speaker 1: something that is in the table right now. I would

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Speaker 1: say that, um, we are likely to see in the

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Speaker 1: next couple of quarters positive suppressing news for emerging market

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Speaker 1: rather than what we saw in the last three years

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Speaker 1: there were constantly negative news. Pablo. Within this and as

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Speaker 1: you go into the weekend, are there financial instabilities within

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Speaker 1: the emerging market world? I mean is it all quiet

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Speaker 1: on the e M front or do you sort of

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Speaker 1: think about your next research piece and say, I've got

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Speaker 1: to really focus on instabilities here or instabilities there, But

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Speaker 1: we're actually focusing on real stability, if I have to

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Speaker 1: be honest, in our current resianch pieces, I mean, we're

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Speaker 1: focusing more about how the emerging markets have trug all

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Speaker 1: of some important head wings and some and some fair

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Speaker 1: risks like China devaluation, rapid fret hike and on lower

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Speaker 1: market prices. But if it were put a finger on

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Speaker 1: something that is more of financial stability, we think that

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Speaker 1: the corporate sector in him has been extending significant amount

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Speaker 1: of its leverage and we will see as the cycle

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Speaker 1: continues to show uh some increase in non non non

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Speaker 1: performing loans, etcetera. But the big difference with Ninteinarty four

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Speaker 1: is that you have not had a wave of serrgn

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Speaker 1: de faults that you had, you know, in the late

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Speaker 1: nineties and the beginning of now that is because the

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Speaker 1: dead has not is not do nominated in dollars as

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Speaker 1: much as it was before. You have massive evaluations in Brazil,

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Speaker 1: in Malaysias you mentioned in Indonesia, all across emerging markets

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Speaker 1: and the sovereigns were very good at taking that head

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Speaker 1: and and in fact some places we have seen some steamers.

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Speaker 1: This is because there's been a very muderant change in

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Speaker 1: the profit of the balance sheet took particularly the sovereigns,

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Speaker 1: not so much color that do you just presume currency depreciation?

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Speaker 1: I mean, if I look at the Asia d X

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Speaker 1: Y index, the Asian bundle X Japan, do you just

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Speaker 1: assume one solution is outright currency depreciation? Boarding on devaluation. Well,

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Speaker 1: one of the lines of the fans that emerging market

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Speaker 1: has built over the course of the last fifteen years

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Speaker 1: was a significant amount of reserves, and this form reserves

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Speaker 1: has allowed these emerging markets to use the exchange rate

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Speaker 1: as a shop observer. Basically, we have seen massive evaluations

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Speaker 1: across the end and these have not led to dramatic

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Speaker 1: financial stresses as as it did in the past. We

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Speaker 1: are saying some export markets stand to turn the corner.

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Speaker 1: Look at Brazil, one of the most batter emerging markets

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Speaker 1: of the last two years. We stand to see a

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Speaker 1: pickup in exports. We stand to see in possubstitution, So

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Speaker 1: we exchange rate. He's doing its marvels in terms of

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Speaker 1: realigning domestic boss andter national prices and starting to be

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Speaker 1: some will give CPM. Yes, I think it's important to clarify,

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Speaker 1: but you're starting to see if things come in the

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Speaker 1: right way. Let's come back Pablo Goldberg with this black rocket.

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Speaker 1: Important conversation, um way more important yesterday, and we'll see

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Speaker 1: how we do today. Yet it's churning. It was a one.

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Speaker 1: What did we get to Mike one oh eight oh two. Yeah,

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Speaker 1: we we got a one yesterday, so it's been bouncing

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Speaker 1: around today. But it is still a little bit weaker. No,

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Speaker 1: I see it corrected one oh seven sixties seven eleven am,

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Speaker 1: eleven am yesterday. Uh, eleven am yesterday, one oh seven

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Speaker 1: sixty seven, with a nice recovery, but we got a

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Speaker 1: ways to go. Futures up eleven, dal features up eighty,

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Speaker 1: the vic's closing sixteen point one six. Now for a

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Speaker 1: news updated with Mike time. Thank you very much both.

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Speaker 1: Frances is not actually changing any Catholic its doctrine on

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Speaker 1: divorce and a long awaited document, but he is putting

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Speaker 1: more emphasis on individual conscious as a guiding principle for Catholics.

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Speaker 1: In the two d fifty six page document, the Pope

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Speaker 1: says the church must no longer sit in judgment and

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Speaker 1: throw stones against those who failed to live up to

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Speaker 1: the ideals of marriage and family life. Francis still says

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Speaker 1: marriage is a lifelong commitment. Secretary of State John Kerry

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Speaker 1: made a surprise visit to Baghdad today. Kerry met with

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Speaker 1: the Racks Prime Minister to talk about the Islamic state.

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Speaker 1: Officials in South Korea say that for the first time,

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Speaker 1: multiple North Korean restaurant workers have escaped from the same

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Speaker 1: restaurant in a foreign country and affective soul. Such workers

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Speaker 1: are usually chosen for their loyalty. Global News twenty four

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Speaker 1: hours a day on Michael Barr, Tom, that was extraordinary.

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Speaker 1: Do that news report? That was really amazing, Michael Barr.

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Speaker 1: That is amazing because and they are chosen for their look.

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Speaker 1: Very good, Michael, thank you so much. Futures Up eleven

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Speaker 1: We continue with Pablo Goldberg. This news update brought to

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Speaker 1: you by Elbow Beach Bermuda, an ocean front enclave of

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Speaker 1: classic style and contemporary luxury, fifty acres of lush gardens

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Speaker 1: and a private ribbon of pink sand beach. Go to

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Speaker 1: Elbow Beach Bermuda dot com for more details Global business

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Speaker 1: news twenty four hours a day at Bloomberg dot com,

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Speaker 1: the Radio plus Mobile Act and on your radio. This

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Speaker 1: is a Bloomberg Business Flash and I'm Karen Moscow. Futures

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Speaker 1: are higher this morning, oil is jumping. Let's go to

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Speaker 1: the first Word Breaking news desk for today's morning call.

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Speaker 1: And here's Vince sing Neerella. Good morning, Vince, Good morning, Karen.

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Speaker 1: Markets are rising on an improved wrist sentiment into the

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Speaker 1: opened down futures up eighty three s and p up

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Speaker 1: by eleven NASDAC plus twenty six. The tenure yield is

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Speaker 1: at one dollar, mixed overall but gaining verse the ten

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Speaker 1: trading at about one O eight fifty. Oil prices, as

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Speaker 1: you said, are high a w t I on Brent

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Speaker 1: plus one thirty four at forty point seven seven. On

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Speaker 1: the US economic front at a thirty Federal Reserve Bank

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Speaker 1: President William Dudley will give a speech on the economy

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Speaker 1: at the University of Bridgeport February Wholesale Inventory and Trade

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Speaker 1: Sales at ten am. Baker used Rick count at one

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Speaker 1: pm in some of today's top news. Verizon is set

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Speaker 1: to plan a bit for Yahoo while Google mills its

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Speaker 1: own offer gaping show as much as eleven percent in

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Speaker 1: late trading after March sales missed already lowered expectations. Live

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Speaker 1: from the First Word Breaking News desk. I'm Vincent, Signalla Karen. Great,

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Speaker 1: thanks Vincent to hear live breaking news over your Bloomberg

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Speaker 1: type squawk and go on your terminal. Let's ask you

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Speaker 1: you a w k go. That's a Bloomberg business flash.

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Speaker 1: Tom and Mike, Karen, thanks so much. Good morning everyone,

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Speaker 1: Good Friday morning. Uh. Bloomberg Surveillance brought you by invest Goo.

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Speaker 1: Friday support. Here. I'm Bloomberg Surveillance. A good person to

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Speaker 1: speak to you today. Pablo Goldberg of black Rock, who

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Speaker 1: was knee deep in the world of emerging markets. We've

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Speaker 1: been talking about the differences between and now and some

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Speaker 1: of the nuances, the dynamics of how emerging market governments

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Speaker 1: and to an extent, beleaguer corporates will respond to slowing

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Speaker 1: g D P let's partition emerging markets. Pablo Obviously there's

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Speaker 1: commodity based e M, there's non commodity based EM but

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Speaker 1: I would suggest there's also e M trying to do

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Speaker 1: tiger like Asian tiger like re Dux countries where there's

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Speaker 1: a real emerging spirit which one are they well at

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Speaker 1: the commodation border world. You know you've got particularly the

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Speaker 1: all countries have the want to have suffered about t

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Speaker 1: under the Russia, Venezuela, Malaysia, Mexico, Columbia to some extent um,

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Speaker 1: the guys who are benefited the most by the dropping

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Speaker 1: commodity prices and the topping lines is clear uh time

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Speaker 1: and being second one um. But also but also China.

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Speaker 1: Something important to notice that there are some commodity importers

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Speaker 1: like Turkey for example, who sells most of the exports

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Speaker 1: to commoditive exporters like those of the need least. So

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Speaker 1: you need to really go deep and do your uh

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Speaker 1: Ny Grady analysis to get who gets affected and who's not,

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Speaker 1: who are trying to really stimulate their economy by you know,

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Speaker 1: lower or weaker currencies. I would say that almost all

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Speaker 1: of emerging markets have been looking at M decresson the

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Speaker 1: h grodus in the value of their currencies to become

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Speaker 1: inquessingly more competitive to the rest of the world. You

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Speaker 1: will notice that there's no single emerging market currency that

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Speaker 1: is hired to the dollar that it was three years ago.

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Speaker 1: I mean China was the only one and we said

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Speaker 1: what they have done. Um, So this use of currencies

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Speaker 1: has been very much involve all across them the m space.

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Speaker 1: The coupon that you get, you know, in Malaysia or

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Speaker 1: you know, name the other country that that you're better

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Speaker 1: at the that I am or any of us, you

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Speaker 1: get a big coupon. How much is a coupon as

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Speaker 1: a general rule, and is it worth it? Well, the

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Speaker 1: truth is that and we as prefer managers in the

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Speaker 1: multi market space generally have been unable to pass a

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Speaker 1: full coupon to investors so respect of how high it

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Speaker 1: was and is a way hiring some countries like Brazil,

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Speaker 1: in the local markets you can get coupons off or

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Speaker 1: yields and in other times it's actually this yels are

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Speaker 1: way way lower across to two and half percent if

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Speaker 1: you look at two places of Hungary for example. But

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Speaker 1: the currency depreciation uh lead to the fact that and

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Speaker 1: we couldn't ask for coupon to investors because that coupon

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Speaker 1: was evotied by currens depreciation. So what's really important here,

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Speaker 1: and going back to your earlier point about the daughter,

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Speaker 1: is that should the dollar stop appreciating against the currencies

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Speaker 1: around the world, and this means that we're now going

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Speaker 1: to be able to pass the coupon dollars investors, And

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Speaker 1: that is what actually made us extremely more bonsive allowed

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Speaker 1: the local markets in the m States for three years,

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Speaker 1: spreads widely in dollar bonds or currency depreciation in local

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Speaker 1: bonds were important head wings um conflicting with our ability

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Speaker 1: to provide investors the full return of the emerging market.

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Speaker 1: This is what we think is changing right now. Where

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Speaker 1: is the non value trap? Where is the best opportunity

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Speaker 1: right now? Things that have been beat up and beleaguered

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Speaker 1: I'm going to get guess it's not Russia. Well we

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Speaker 1: and Rush actually was one of the top performers of

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Speaker 1: the market last year, believe it or not, despite oil

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Speaker 1: prices kept on going lower. Lush I got very much

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Speaker 1: hurt in two thousand and fourteen, and we'll cover very

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Speaker 1: much in two thousand and then fifteen. At the places.

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Speaker 1: What we're looking to get some nice returns, UM is

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Speaker 1: places in Mexico. UM, we are more encouraged about Indonesia.

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Speaker 1: We like UM in places like on the wayside Brazil

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Speaker 1: where the scoopon is quite high, as you mentioned. So

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Speaker 1: there's there's a there's a few there's a few spots

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Speaker 1: where actually things are getting way more interesting. Particularly is

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Speaker 1: currenc is stopped appreciating. Well, you know, I get the

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Speaker 1: currency idea to help me with Brazil. I mean, they're

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Speaker 1: gonna very quickly here, they're gonna have an impeachment. But

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Speaker 1: the yields are extraordinary, right right, I mean it really

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Speaker 1: Brazil is UH facing a very important decisions to be

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Speaker 1: made going forward, following many years of very dramatic adjustment,

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Speaker 1: and the economy, each of phrase which are on the

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Speaker 1: other side of this coupon and marketing positively extremely tired.

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Speaker 1: Physical policy will have to continue to be very tight

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Speaker 1: because the physical lefts have gone very very large, the

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Speaker 1: currency have moved a lot. There's what we're starting to

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Speaker 1: see some in SEEP and turn around in the activity story. UM.

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Speaker 1: But obviously sort of the policy society and to get

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Speaker 1: a little more clear, UH investors a bet that they're

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Speaker 1: gonna it's gonna be a change in policies, but it's

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Speaker 1: a little bit early to say, but it could be

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Speaker 1: one of those places that would go from a place

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Speaker 1: that was very bad for investment and to get more better.

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Speaker 1: Thanks for the briefing, Pablo Goldberger, Black Rock Ats. We

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Speaker 1: uh do the tour there of the emerging market debt

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Speaker 1: and um, you know, don't play this at home. I

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Speaker 1: think is part of the diversification. Only gets yourself far

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Speaker 1: in the e M arena. Uh. We have economic data

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Speaker 1: features of twelve doubt features up eighty eight. This is

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Speaker 1: Bloomberg's surveillance, all due respect highlight brought you by Landrover.

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