1
00:00:02,320 --> 00:00:05,720
Speaker 1: Bloombo Business News twenty four hours a day at Bloomberg

2
00:00:05,760 --> 00:00:08,840
Speaker 1: dot com, the Radio plus mobile app, and on your radio.

3
00:00:09,119 --> 00:00:12,799
Speaker 1: This is a Bloomberg Business Flash and I'm career in Moscow.

4
00:00:12,840 --> 00:00:16,400
Speaker 1: This updates brought to you buy American Arbitration Association. Business

5
00:00:16,440 --> 00:00:20,560
Speaker 1: disputes are inevitable. Resolve faster with the American Arbitration Association,

6
00:00:20,840 --> 00:00:24,160
Speaker 1: the global leader in alternative dispute resolution for over eighty

7
00:00:24,160 --> 00:00:28,200
Speaker 1: five years. Learn more at a dyard dot org. International Paper,

8
00:00:28,280 --> 00:00:31,360
Speaker 1: the world's largest paper company, agreeing to buy Warehouser's pulp

9
00:00:31,400 --> 00:00:34,200
Speaker 1: business for about two point two billion dollars to add

10
00:00:34,240 --> 00:00:37,760
Speaker 1: production of the absorbent raw material used in diapers and

11
00:00:37,800 --> 00:00:41,680
Speaker 1: other hygiene products. The euro is climbing against the dollars,

12
00:00:41,680 --> 00:00:45,040
Speaker 1: strengthening through a dollar fifteen for the first time since August.

13
00:00:45,159 --> 00:00:48,360
Speaker 1: Right now, the euro is at a dollar fourteen nine two.

14
00:00:48,760 --> 00:00:50,960
Speaker 1: The yen is at one oh six point five six.

15
00:00:51,000 --> 00:00:53,959
Speaker 1: We're seeing futures move higher, with SNP EMNY futures at

16
00:00:54,000 --> 00:00:56,240
Speaker 1: five points, dow e Many futures up thirty two, and

17
00:00:56,360 --> 00:00:59,400
Speaker 1: NASA doc EMUNY futures up seven dacks. In Germany's up

18
00:00:59,440 --> 00:01:01,840
Speaker 1: nine tenths per cent. Ten year Treasury up one thirty

19
00:01:01,920 --> 00:01:04,800
Speaker 1: second the yield one two percent. Now, I'm ex screwed

20
00:01:04,840 --> 00:01:07,000
Speaker 1: Oil down three tenths per cent or fourteen cents, to

21
00:01:07,080 --> 00:01:09,920
Speaker 1: forty five seventy eight A barrel comics gold is up

22
00:01:09,959 --> 00:01:12,360
Speaker 1: seven tenths per cent or nine dollars to twelve ninety

23
00:01:12,440 --> 00:01:16,600
Speaker 1: nine seventy announced. Alian said profits searched twenty one percent

24
00:01:16,640 --> 00:01:18,120
Speaker 1: in the first three months of the year, and the

25
00:01:18,120 --> 00:01:22,040
Speaker 1: insurer reiterated its twenty sixteen targets. Alliance is scheduled to

26
00:01:22,120 --> 00:01:25,240
Speaker 1: report full first quarter earnings on May eleven. It shares

27
00:01:25,280 --> 00:01:28,319
Speaker 1: her up two point two percent in German trading. That's

28
00:01:28,319 --> 00:01:31,360
Speaker 1: a Bloomberg business flash, Tom and Mike Karn, thanks so

29
00:01:31,440 --> 00:01:35,520
Speaker 1: much again. Futures up five. It is on Wall Street.

30
00:01:36,480 --> 00:01:40,080
Speaker 1: The following is from Bloomberg View. Opinions and commentary from

31
00:01:40,080 --> 00:01:44,000
Speaker 1: Bloomberg columnists. I'm justin Fox, a columnist for Bloomberg View.

32
00:01:44,160 --> 00:01:48,120
Speaker 1: Washington's Metro, the country's second busiest rapid transit system, has

33
00:01:48,160 --> 00:01:50,440
Speaker 1: been having a tough year. In March, the whole system

34
00:01:50,520 --> 00:01:53,559
Speaker 1: shut down for a day for emergency repairs. Soon after

35
00:01:53,680 --> 00:01:56,200
Speaker 1: a top official warned that entire lines might need to

36
00:01:56,200 --> 00:01:59,120
Speaker 1: be idled for up to six months. Train delayser rampant,

37
00:01:59,200 --> 00:02:02,200
Speaker 1: and ridership has been declining since two thousand ten, even

38
00:02:02,240 --> 00:02:05,240
Speaker 1: as the region's population grows. There are many reasons for

39
00:02:05,280 --> 00:02:08,200
Speaker 1: these problems, but one of them is lack of resources.

40
00:02:08,280 --> 00:02:11,040
Speaker 1: Fares don't cover operating costs, and Metro has to go

41
00:02:11,080 --> 00:02:13,519
Speaker 1: to the governments of Maryland, Virginia, in d C every

42
00:02:13,560 --> 00:02:15,760
Speaker 1: year to ask for money. It is the only major

43
00:02:15,800 --> 00:02:18,760
Speaker 1: transit system in the US that has no dedicated source

44
00:02:18,800 --> 00:02:22,519
Speaker 1: of tax revenue. It Metro is generating tons of tax revenue.

45
00:02:22,639 --> 00:02:25,480
Speaker 1: Study after study has showed that in the Washington area

46
00:02:25,480 --> 00:02:28,519
Speaker 1: and elsewhere, having a rapid transit station in the neighborhood

47
00:02:28,639 --> 00:02:32,480
Speaker 1: increases property values, which means more revenue from property taxes.

48
00:02:32,560 --> 00:02:34,840
Speaker 1: Metro has found a way to tap into this value

49
00:02:34,880 --> 00:02:37,560
Speaker 1: creation along the new Silver Line to Dullis Airport with

50
00:02:37,639 --> 00:02:40,680
Speaker 1: special assessments on property near the stations, But there's been

51
00:02:40,680 --> 00:02:43,720
Speaker 1: a big real estate boom around existing stations too. How

52
00:02:43,720 --> 00:02:46,080
Speaker 1: about giving Metro some more of the money it's generating.

53
00:02:46,160 --> 00:02:49,160
Speaker 1: I'm Justin Fox, a columnist for Bloomberg View. For more

54
00:02:49,160 --> 00:02:52,320
Speaker 1: Bloomberg opinion and commentary, please go to Bloomberg View. Dot

55
00:02:52,400 --> 00:02:55,440
Speaker 1: com or view go on the Bloomberg terminal. This has

56
00:02:55,480 --> 00:02:59,520
Speaker 1: been Bloomberg View and blow commentary could be heard hourly weekdays.

57
00:03:00,040 --> 00:03:03,040
Speaker 1: I'm Bloomberg Radio. Can't say enough about Muhammad al Arian's

58
00:03:03,200 --> 00:03:08,400
Speaker 1: article today on foreign exchange is last resort for policymakers.

59
00:03:08,560 --> 00:03:12,959
Speaker 1: Smart smart effort by doctor Well definitely worth a read.

60
00:03:13,320 --> 00:03:15,600
Speaker 1: Writes a lot, but you know, every once in a

61
00:03:15,639 --> 00:03:17,920
Speaker 1: while it's just brilliant, and that was one of them.

62
00:03:18,000 --> 00:03:22,240
Speaker 1: James Steele HSBC said Victory Lap said gold would go

63
00:03:22,360 --> 00:03:30,880
Speaker 1: to how wrong he is towel earlier today, so yes,

64
00:03:30,960 --> 00:03:33,280
Speaker 1: how right he was. James Steele joining us with a

65
00:03:33,360 --> 00:03:36,880
Speaker 1: Victory Lap. He is a fundamental analysis, not so much

66
00:03:36,960 --> 00:03:39,080
Speaker 1: gaining the price of gold. And we're not going to

67
00:03:39,160 --> 00:03:41,880
Speaker 1: ask him too much about where gold's gonna go. Uh

68
00:03:41,880 --> 00:03:46,640
Speaker 1: and Mr Steele, congratulations on a lonely call months and

69
00:03:46,720 --> 00:03:51,600
Speaker 1: months ago. Is a supply demand architecture there just sustaining

70
00:03:51,680 --> 00:03:54,480
Speaker 1: gold where it is. Well, first of all, thank you

71
00:03:54,560 --> 00:03:56,920
Speaker 1: very much, Tom. That's that's that's very gracious of you.

72
00:03:57,160 --> 00:04:01,280
Speaker 1: Um uh, well, we on on that and um there

73
00:04:01,320 --> 00:04:04,800
Speaker 1: are maybe some concerns, but but the the we have

74
00:04:04,960 --> 00:04:09,480
Speaker 1: not seen a great deal of interest this year from China. UH,

75
00:04:09,600 --> 00:04:13,040
Speaker 1: the imports are down a little bit year on year,

76
00:04:13,480 --> 00:04:17,880
Speaker 1: although not drastically so. And India has withdrawn from the market.

77
00:04:18,279 --> 00:04:20,520
Speaker 1: Why is because the price has gone up and people

78
00:04:20,560 --> 00:04:23,359
Speaker 1: go at the margin. I can't buy it again mostly

79
00:04:23,440 --> 00:04:26,120
Speaker 1: and we've had a very weak rupeat. But also in

80
00:04:26,120 --> 00:04:29,680
Speaker 1: the case of India specifically UH the the the there

81
00:04:29,720 --> 00:04:33,279
Speaker 1: was a merchant strike six or seven weeks in in

82
00:04:33,360 --> 00:04:36,919
Speaker 1: reaction to the government putting on one percent excise on

83
00:04:37,080 --> 00:04:41,480
Speaker 1: gold and jewelry I UH sales items. Mike, it's in

84
00:04:41,520 --> 00:04:45,239
Speaker 1: addition to the ten percent tariff on on on bullion imports.

85
00:04:45,240 --> 00:04:48,680
Speaker 1: By the way, So Mike, the mayor of New York Mr.

86
00:04:48,760 --> 00:04:51,600
Speaker 1: To Plasio, or the Governor of New York Mr. Cuomo,

87
00:04:52,200 --> 00:04:55,200
Speaker 1: or the President can put a tariff so that you

88
00:04:55,240 --> 00:05:00,480
Speaker 1: and I don't have to deal with Tiffany's Sorry anyway, dear,

89
00:05:00,480 --> 00:05:03,800
Speaker 1: I couldn't buy you gold earlier. On the show, James,

90
00:05:03,800 --> 00:05:05,920
Speaker 1: we had you're doing your bit for the current count.

91
00:05:06,279 --> 00:05:09,200
Speaker 1: Oh he has, Yes, he has definitely done that. Jeff

92
00:05:09,200 --> 00:05:11,479
Speaker 1: de Graph from restaurance Macro, he's a technical guy, said

93
00:05:11,480 --> 00:05:16,320
Speaker 1: the technicals suggested that gold would continue to rise. Actually,

94
00:05:16,480 --> 00:05:19,160
Speaker 1: you know, he predicted a rather strong rise, but he said,

95
00:05:19,200 --> 00:05:23,320
Speaker 1: nobody knows really why. And so I'll ask you, does

96
00:05:23,560 --> 00:05:25,760
Speaker 1: can gold keep going up from here? And if so,

97
00:05:26,680 --> 00:05:29,240
Speaker 1: what drives it? Well? I think much will depend on

98
00:05:29,279 --> 00:05:31,680
Speaker 1: the dollar and and and that's what we've seen this

99
00:05:31,680 --> 00:05:35,400
Speaker 1: This has been two three important things have rallied the

100
00:05:35,440 --> 00:05:38,760
Speaker 1: market this year. And just touched on on something that

101
00:05:38,760 --> 00:05:41,520
Speaker 1: that Tom and I had previously spoken about. The gold

102
00:05:41,560 --> 00:05:44,240
Speaker 1: declines last year and the year before. We're predicated on

103
00:05:44,760 --> 00:05:47,960
Speaker 1: sharp interest rate rises this year of around four times

104
00:05:48,120 --> 00:05:50,680
Speaker 1: by the Fed and at least twice last year. We

105
00:05:50,760 --> 00:05:53,599
Speaker 1: only got one rise last year. Now we may only

106
00:05:53,640 --> 00:05:57,240
Speaker 1: get two increases this year, maybe even not. And and

107
00:05:57,320 --> 00:06:00,960
Speaker 1: so therefore the gold market is effectively recalibrate ing it is.

108
00:06:01,040 --> 00:06:03,720
Speaker 1: It is taking back the losses that it made an

109
00:06:03,760 --> 00:06:07,680
Speaker 1: anticipation of a much higher, of a much deeper fet trajectory.

110
00:06:08,120 --> 00:06:10,320
Speaker 1: And and that is the essence I think to the rally.

111
00:06:10,640 --> 00:06:12,880
Speaker 1: This has been supported by what you were just talking

112
00:06:12,920 --> 00:06:16,440
Speaker 1: about earlier, um that decline in the dollar. Uh. The

113
00:06:16,440 --> 00:06:18,400
Speaker 1: the the euro is a good way to look at it.

114
00:06:18,400 --> 00:06:21,359
Speaker 1: It's the world's second reserve currency, and gold tends to

115
00:06:21,400 --> 00:06:24,279
Speaker 1: move fairly closely with it um and that is now

116
00:06:24,400 --> 00:06:27,839
Speaker 1: over back over one four, which is very supportive of

117
00:06:27,839 --> 00:06:30,480
Speaker 1: of the gold market. As long as the dollar remains

118
00:06:30,520 --> 00:06:33,120
Speaker 1: on the defense of not just to the Euro but

119
00:06:33,200 --> 00:06:36,680
Speaker 1: also to the end and and some emerging market currencies,

120
00:06:36,720 --> 00:06:39,360
Speaker 1: than the outlook for gold will continue to be good.

121
00:06:40,120 --> 00:06:43,400
Speaker 1: But what I would just caution is that the physical

122
00:06:43,520 --> 00:06:47,279
Speaker 1: end of the market is not responding, or is responding

123
00:06:47,320 --> 00:06:51,080
Speaker 1: by by pulling back, and this is effectively a type

124
00:06:51,080 --> 00:06:55,640
Speaker 1: of sticker shock. Um. It's getting progressively expensive for people

125
00:06:55,640 --> 00:06:57,640
Speaker 1: in the emerging world to buy gold. It's where most

126
00:06:57,680 --> 00:07:01,240
Speaker 1: of the physical gold is brought. So have something of

127
00:07:01,279 --> 00:07:04,520
Speaker 1: a dichotomy right now. The investment demand is quite strong,

128
00:07:04,800 --> 00:07:07,280
Speaker 1: but the underlying physical demand is pulling back. Well. It

129
00:07:07,320 --> 00:07:09,880
Speaker 1: could be interesting because if if then the FED were

130
00:07:09,960 --> 00:07:12,760
Speaker 1: to surprise, if we get some good economic numbers and

131
00:07:12,800 --> 00:07:14,920
Speaker 1: all of a sudden the markets decide the FED is

132
00:07:14,960 --> 00:07:19,400
Speaker 1: back in play, could we have some serious volatility. I

133
00:07:19,440 --> 00:07:22,320
Speaker 1: think that's a fair comment, yes, And and that's another

134
00:07:22,320 --> 00:07:24,320
Speaker 1: reason why you've got to be a bit wary of

135
00:07:24,360 --> 00:07:27,880
Speaker 1: the outside when the rate rises come whenever they do

136
00:07:29,120 --> 00:07:32,400
Speaker 1: the FED, that the gold market might react. Now we've

137
00:07:32,440 --> 00:07:36,120
Speaker 1: already seen one FED increase in December and that actually

138
00:07:36,120 --> 00:07:40,240
Speaker 1: coincided with pretty much the low of the market. And UH,

139
00:07:40,640 --> 00:07:44,120
Speaker 1: some empirical evidence shows that the gold market tends to

140
00:07:44,680 --> 00:07:47,679
Speaker 1: weaken going into a fed rate rise, but then rally

141
00:07:47,720 --> 00:07:50,160
Speaker 1: for the next hundred and twenty trading days. If you

142
00:07:50,240 --> 00:07:53,400
Speaker 1: take December as that as that level, then we're just

143
00:07:53,440 --> 00:07:56,760
Speaker 1: about exhausted through that. Well, what the what the A

144
00:07:56,760 --> 00:07:59,200
Speaker 1: lot of the public doesn't know, and particularly the gold

145
00:07:59,240 --> 00:08:01,560
Speaker 1: bugs and all that. No, is that the partition of

146
00:08:01,560 --> 00:08:05,160
Speaker 1: the industry in analysis of the metal the evil medal

147
00:08:05,840 --> 00:08:10,160
Speaker 1: is very careful. You're a fundamental guy looking at fundamental trends.

148
00:08:10,600 --> 00:08:13,120
Speaker 1: Are you a friend of the gold bugs right now?

149
00:08:13,680 --> 00:08:17,240
Speaker 1: Or have we seen this James Steele rally for reasons

150
00:08:17,400 --> 00:08:22,840
Speaker 1: totally removed from what gold bugs look for. Well, there

151
00:08:23,000 --> 00:08:27,480
Speaker 1: sometimes can be a rather excitable element in the gold market,

152
00:08:27,560 --> 00:08:32,120
Speaker 1: and it's often tied to you know, worries, maybe excessive

153
00:08:32,120 --> 00:08:34,319
Speaker 1: worries about what's what's going to happen and is that

154
00:08:34,440 --> 00:08:37,600
Speaker 1: out there now? Um, there's always an element of that,

155
00:08:37,679 --> 00:08:41,440
Speaker 1: But I I believe that most of this rally is

156
00:08:41,600 --> 00:08:44,760
Speaker 1: funded on pretty much a good reaction in the paper

157
00:08:44,800 --> 00:08:48,640
Speaker 1: markets to negative interest rates. UH and to the lack

158
00:08:48,720 --> 00:08:52,320
Speaker 1: of fed FED increases and two dollar weakness. You know

159
00:08:52,480 --> 00:08:54,800
Speaker 1: what is interesting is if you look at the negative

160
00:08:54,960 --> 00:08:58,679
Speaker 1: indust rate argument, it's also very bullish for gold. Um.

161
00:08:58,720 --> 00:09:03,599
Speaker 1: The distress factor gold has is always weakened by opportunity

162
00:09:03,679 --> 00:09:06,240
Speaker 1: cost if rates are too high, and if you have

163
00:09:06,320 --> 00:09:09,400
Speaker 1: negative rates then that removes that argument. Um. And you

164
00:09:09,480 --> 00:09:12,560
Speaker 1: also have the way to yield curve reacts under negative

165
00:09:12,559 --> 00:09:15,439
Speaker 1: interest rates is also positive for gold. And what is

166
00:09:15,520 --> 00:09:18,760
Speaker 1: interesting is if you look at the issuances of bonds

167
00:09:18,800 --> 00:09:22,280
Speaker 1: with negative rates, they began in full swing in December

168
00:09:22,360 --> 00:09:25,080
Speaker 1: and that is when the gold market bottomed. So keep

169
00:09:25,120 --> 00:09:27,120
Speaker 1: your eye on negative raids. It's something we don't look

170
00:09:27,120 --> 00:09:29,040
Speaker 1: at in the US much because we don't have them,

171
00:09:29,400 --> 00:09:32,440
Speaker 1: but around of the world's GDP is under a negative

172
00:09:32,440 --> 00:09:36,040
Speaker 1: interest rate regime and that is positive for gold. James Steele,

173
00:09:36,080 --> 00:09:41,360
Speaker 1: thank you so much with HSBC gold here at and now, Mike,

174
00:09:41,480 --> 00:09:45,040
Speaker 1: is it appropriate that I have a correction just back?

175
00:09:45,200 --> 00:09:49,920
Speaker 1: I mean I had to get a new Russell saves

176
00:09:50,000 --> 00:09:53,880
Speaker 1: the day, Tom Keene, you idiot. The vix is now

177
00:09:54,040 --> 00:09:58,319
Speaker 1: quoted in real time in the morning, so I was

178
00:09:58,400 --> 00:10:01,560
Speaker 1: quoting the vix earlier. And of course my eyes are

179
00:10:01,559 --> 00:10:04,040
Speaker 1: still glazed over from all the room I drink and

180
00:10:04,280 --> 00:10:07,480
Speaker 1: I couldn't see on my bloom Bird, which correctly shows

181
00:10:08,160 --> 00:10:13,000
Speaker 1: the VIX is a real time number pre fifteen point

182
00:10:13,040 --> 00:10:16,960
Speaker 1: eight seven right now up point one seven the VIX,

183
00:10:17,320 --> 00:10:20,839
Speaker 1: according to Russell informing me out on Twitter, trading from

184
00:10:20,920 --> 00:10:24,800
Speaker 1: three fifteen am East Coast time, you've got to get

185
00:10:24,880 --> 00:10:27,080
Speaker 1: up pretty early in the morning to get out of

186
00:10:27,080 --> 00:10:31,440
Speaker 1: tom keen, And apparently Russell did. But Russell saved the

187
00:10:31,520 --> 00:10:33,920
Speaker 1: day there at his fifteen point VIX just moved. That

188
00:10:34,080 --> 00:10:39,000
Speaker 1: changes fifty seven in the morning. That changes everything. Yes, now,

189
00:10:40,000 --> 00:10:42,760
Speaker 1: tick well, we don't have an opinion on gold. We

190
00:10:42,840 --> 00:10:45,680
Speaker 1: get tons of mail on it. Mike and I, like

191
00:10:45,720 --> 00:10:48,560
Speaker 1: everybody else, got differing people. Will I will, I will

192
00:10:48,640 --> 00:10:50,240
Speaker 1: just go on record I say I had I never

193
00:10:50,320 --> 00:10:52,400
Speaker 1: have any idea why gold does what it does, and

194
00:10:52,480 --> 00:10:54,160
Speaker 1: you have a lot of people who are experts saying

195
00:10:54,200 --> 00:10:58,400
Speaker 1: they don't know either. One of my first conversations many

196
00:10:58,480 --> 00:11:02,760
Speaker 1: years ago, the gentleman by named John Templeton in I've

197
00:11:02,800 --> 00:11:07,200
Speaker 1: heard of in Toronto, and Sir John whispered to me, Tom,

198
00:11:07,240 --> 00:11:10,160
Speaker 1: I just don't understand gold. But he did it with

199
00:11:10,160 --> 00:11:13,239
Speaker 1: a Tennessee. I feel better now. Bloomberg's surveillance