1
00:00:03,320 --> 00:00:06,600
Speaker 1: This is Bloomberg Surveillance way text of view that as

2
00:00:06,640 --> 00:00:09,400
Speaker 1: the FED rises rights, that removes the US dollar liquidity

3
00:00:09,440 --> 00:00:11,320
Speaker 1: from the rest of the world. Sixty percent of global

4
00:00:11,360 --> 00:00:15,200
Speaker 1: j DP relies on US toll liquidity to bottom have

5
00:00:15,480 --> 00:00:19,480
Speaker 1: basically seen their income stagnate over a third of a century.

6
00:00:19,560 --> 00:00:21,720
Speaker 1: The Asian economies there are the fastest growing ones in

7
00:00:21,760 --> 00:00:24,080
Speaker 1: the world, China's Both may be slowing down, but we're

8
00:00:24,079 --> 00:00:26,239
Speaker 1: still talking about China growing at six and a half

9
00:00:26,280 --> 00:00:30,560
Speaker 1: seven percent. Bloomberg Surveillance your link to the world of economics,

10
00:00:30,760 --> 00:00:35,400
Speaker 1: finance and investment on Bloomberg Radio. Good morning, It is

11
00:00:35,560 --> 00:00:38,040
Speaker 1: seven am on Wall Street. It is five am in

12
00:00:38,120 --> 00:00:41,879
Speaker 1: Fort McMurray, Canada, where we wish the firefighters battling that

13
00:00:42,000 --> 00:00:44,360
Speaker 1: huge blaze up there. The best oil higher this morning,

14
00:00:44,360 --> 00:00:48,839
Speaker 1: in part on concerns of interruptions to the supply from Canada.

15
00:00:48,880 --> 00:00:52,080
Speaker 1: West Texas sixty two is up two point two percent,

16
00:00:52,520 --> 00:00:57,120
Speaker 1: Brent nine up one point six percent this morning, but

17
00:00:57,200 --> 00:01:01,480
Speaker 1: actually pretty much everything is higher this morning. By the way,

18
00:01:01,520 --> 00:01:04,640
Speaker 1: I'm Michael McGee along with Tom Keen Unsurveillance today and

19
00:01:04,640 --> 00:01:07,679
Speaker 1: we're watching a global rally overnight. Asia up and now

20
00:01:07,680 --> 00:01:10,800
Speaker 1: Europe the stock six hundred four points higher one point

21
00:01:10,800 --> 00:01:14,000
Speaker 1: two percent, the docks in Germany up one eighty points.

22
00:01:14,000 --> 00:01:17,039
Speaker 1: That's one point eight percent in London, a thirty point

23
00:01:17,040 --> 00:01:19,640
Speaker 1: game for the Footsie half a percent of the day

24
00:01:19,680 --> 00:01:25,000
Speaker 1: bonds little changed to higher, the curve stepens. The two

25
00:01:25,080 --> 00:01:27,920
Speaker 1: year no yield is at seventy three basis points, five

26
00:01:27,959 --> 00:01:30,600
Speaker 1: year one point to two, and the ten year one

27
00:01:30,640 --> 00:01:34,840
Speaker 1: point seven seven. On the day, the dollars stronger. Here's

28
00:01:34,840 --> 00:01:39,240
Speaker 1: the real debate point. The dollar following comments and the

29
00:01:39,640 --> 00:01:42,720
Speaker 1: jobs report following comments from the Fed moving higher today

30
00:01:43,160 --> 00:01:46,040
Speaker 1: ninety three point nine for the d X y index,

31
00:01:46,160 --> 00:01:49,320
Speaker 1: The yen weekends to one oh oh four, the year

32
00:01:49,360 --> 00:01:54,280
Speaker 1: O one thirteen eight, and the pound one four fifty one.

33
00:01:54,400 --> 00:01:57,480
Speaker 1: So that's uh the question whether interest rates in the

34
00:01:57,560 --> 00:02:01,320
Speaker 1: United States and whether the dollar and bond market. We

35
00:02:01,400 --> 00:02:05,559
Speaker 1: have seen Fed officials the latest Bill Dudley this morning

36
00:02:05,600 --> 00:02:08,560
Speaker 1: time in the New York Times saying we're still on

37
00:02:08,639 --> 00:02:11,240
Speaker 1: track for June if the numbers continue the way they are,

38
00:02:11,280 --> 00:02:14,200
Speaker 1: But that's not the way the bond market season. John

39
00:02:14,280 --> 00:02:17,040
Speaker 1: Riding is the chief economist and founder of r t

40
00:02:17,160 --> 00:02:20,560
Speaker 1: Q Economics. John, there's an old saying, don't fight the FED.

41
00:02:21,000 --> 00:02:24,280
Speaker 1: And it seems that people on bond trading desks have

42
00:02:24,400 --> 00:02:27,080
Speaker 1: decided they want to get into a scrap with the

43
00:02:27,200 --> 00:02:30,040
Speaker 1: U S. Central Bank. Well, the problem is the FED

44
00:02:30,240 --> 00:02:35,200
Speaker 1: is completely messed up its communications policy and UH. It

45
00:02:35,600 --> 00:02:40,400
Speaker 1: told us it had objectives for unemployment inflation. UH, and

46
00:02:40,480 --> 00:02:42,560
Speaker 1: then as we go close to those, it lowered the

47
00:02:42,639 --> 00:02:45,639
Speaker 1: unemployment rate, so that the market simply doesn't believe the FED.

48
00:02:45,720 --> 00:02:48,200
Speaker 1: And I think that to believe the Fed, John at

49
00:02:48,280 --> 00:02:51,239
Speaker 1: YELLTT has to come out and deliver a similar message.

50
00:02:51,440 --> 00:02:54,680
Speaker 1: And as I said to Tom on TV a few minutes,

51
00:02:54,720 --> 00:02:57,920
Speaker 1: you say to me right now to um, what we

52
00:02:58,000 --> 00:03:02,480
Speaker 1: have here is typically the central Uh. The chairman of

53
00:03:02,480 --> 00:03:05,360
Speaker 1: the FET goes in May and gives a testimony, so

54
00:03:05,400 --> 00:03:07,880
Speaker 1: she can be perfectly tied up to say not that

55
00:03:07,919 --> 00:03:11,560
Speaker 1: we're going in June, but that we are still committed

56
00:03:11,600 --> 00:03:15,280
Speaker 1: to renormalizing monetary policy, and the data points are close

57
00:03:15,320 --> 00:03:17,680
Speaker 1: and if we continue in that direction, we will go.

58
00:03:17,760 --> 00:03:20,600
Speaker 1: Because the FED in the past halt about cumulative improvement,

59
00:03:20,760 --> 00:03:24,880
Speaker 1: and cumulative improvement as the actual progress won't quote upon exactly,

60
00:03:25,160 --> 00:03:28,200
Speaker 1: not just the latest day to point cumulative improvement from

61
00:03:28,200 --> 00:03:30,720
Speaker 1: a temper cent an employment rate to a five percent

62
00:03:30,800 --> 00:03:33,799
Speaker 1: unemployment rate. John Writing with the rd Q Economics. We

63
00:03:33,840 --> 00:03:36,960
Speaker 1: say good morning to all of your worldwide Bloomberg Radio

64
00:03:37,000 --> 00:03:41,280
Speaker 1: Plus and of course across Bloomberg dot com Bloomberg Surveillance.

65
00:03:41,320 --> 00:03:45,920
Speaker 1: This morning brought you by Investco. Factor based strategies can

66
00:03:45,960 --> 00:03:50,800
Speaker 1: help investors focus on high quality, low volatility and more.

67
00:03:51,800 --> 00:03:56,200
Speaker 1: Learn more at investco dot com Slash High Conviction Genre

68
00:03:56,200 --> 00:03:58,600
Speaker 1: writing giving as great perspective this morning, John, As I

69
00:03:58,640 --> 00:04:03,800
Speaker 1: mentioned earlier, your note had a certain heat on Friday.

70
00:04:03,960 --> 00:04:08,360
Speaker 1: Let's frame the two avenues out of the jobs report.

71
00:04:08,480 --> 00:04:10,760
Speaker 1: One is it was a molding number. We all agree

72
00:04:10,760 --> 00:04:14,120
Speaker 1: on this with the molding revision. And then there's the yeah,

73
00:04:14,240 --> 00:04:18,039
Speaker 1: but the underlying data was actually pretty good. Explained to

74
00:04:18,160 --> 00:04:22,840
Speaker 1: us why hours worked in wages can trump? That was

75
00:04:22,960 --> 00:04:25,560
Speaker 1: upon their thinking. Did you like that? That was a

76
00:04:25,640 --> 00:04:27,440
Speaker 1: very Did you see how we did that? Can trump?

77
00:04:27,839 --> 00:04:31,240
Speaker 1: Get it? Can trump the countables of non farm payrolls?

78
00:04:31,960 --> 00:04:33,760
Speaker 1: Can we start off with the non fund payroll number?

79
00:04:33,760 --> 00:04:36,359
Speaker 1: Because our number for private perils was a hundred and

80
00:04:36,360 --> 00:04:39,279
Speaker 1: seventy five thousand, We got a hundred and seventy one thousand.

81
00:04:40,360 --> 00:04:44,240
Speaker 1: Why because we had such a mild winter that the

82
00:04:44,360 --> 00:04:47,039
Speaker 1: pick up in jobs that normally take place because people

83
00:04:47,040 --> 00:04:50,280
Speaker 1: couldn't work because the weather is so bad in February

84
00:04:50,320 --> 00:04:54,000
Speaker 1: and March, the seasonal sniff, they were already working, and

85
00:04:54,080 --> 00:04:56,960
Speaker 1: so we had a hundred and sixty thousand three month

86
00:04:57,000 --> 00:05:00,680
Speaker 1: averages around two hundred thousand. I think that the the

87
00:05:01,360 --> 00:05:04,200
Speaker 1: FED four cash revision calls by economists on Friday at

88
00:05:04,240 --> 00:05:06,880
Speaker 1: some major banks, we're like looking for an excuse to

89
00:05:06,920 --> 00:05:09,080
Speaker 1: come to the market, and I think it ridiculously over

90
00:05:09,160 --> 00:05:12,280
Speaker 1: emphasizes the latest data point. But the FED in the

91
00:05:12,360 --> 00:05:15,440
Speaker 1: last statement talked about consumer fundamentals as well. So you've

92
00:05:15,440 --> 00:05:18,359
Speaker 1: got an increase in hours worked because we had a

93
00:05:18,400 --> 00:05:20,920
Speaker 1: longer work week of four tenths of a percent. We

94
00:05:20,960 --> 00:05:24,280
Speaker 1: had a three tenths of p percent increase in wages.

95
00:05:24,480 --> 00:05:27,280
Speaker 1: That's a seven tenths of p percent increases running somewhere

96
00:05:27,279 --> 00:05:30,920
Speaker 1: between eight or around eight percent at an annualized rate

97
00:05:31,200 --> 00:05:34,720
Speaker 1: if we were to continue that in wage income, which

98
00:05:34,720 --> 00:05:36,479
Speaker 1: is the bulk of what people have to spend. So

99
00:05:36,480 --> 00:05:39,320
Speaker 1: if you're a Kanzian and you're worried about demanding, you're

100
00:05:39,360 --> 00:05:42,479
Speaker 1: worried about the consumer, you have this big income increase.

101
00:05:43,440 --> 00:05:45,880
Speaker 1: John Wrinning with this with his work at the Bank

102
00:05:45,880 --> 00:05:48,279
Speaker 1: of England, at the Federal Reserve System, of course, with

103
00:05:48,320 --> 00:05:51,800
Speaker 1: Bear Stearns for years, and now at rd Q Economics. John,

104
00:05:52,040 --> 00:05:54,839
Speaker 1: I'm gonna massively rip up the script here. Greg Villier

105
00:05:54,960 --> 00:05:59,919
Speaker 1: has given us great perspective on our economic politics. Villiers

106
00:06:00,040 --> 00:06:05,240
Speaker 1: and writing stunning political notes about Secretary Clinton and particularly

107
00:06:05,680 --> 00:06:10,039
Speaker 1: Mr Trump. Here's Valier this morning on debt restructuring and

108
00:06:10,160 --> 00:06:13,960
Speaker 1: Donald Trump. Quote he's playing with matches in a very

109
00:06:14,080 --> 00:06:17,080
Speaker 1: arid forest. The US and much of the world is

110
00:06:17,120 --> 00:06:21,400
Speaker 1: crushed by individual and government debt. So here comes someone

111
00:06:21,480 --> 00:06:25,800
Speaker 1: with catnip. Let's restructure the debt. Is it even feasible

112
00:06:26,360 --> 00:06:29,880
Speaker 1: within the economics and the chapters in our economic textbook

113
00:06:29,920 --> 00:06:34,719
Speaker 1: on debt restructuring that you can restructure quote unquote full

114
00:06:34,760 --> 00:06:38,120
Speaker 1: faith and credit debt like you'd restructure a hotel in

115
00:06:38,160 --> 00:06:41,320
Speaker 1: Atlantic City. No, you can't. But what you can do

116
00:06:41,520 --> 00:06:45,159
Speaker 1: is lengthen the maturity of the debt at these very

117
00:06:45,200 --> 00:06:48,359
Speaker 1: low interest rates, and that has been a policy at

118
00:06:48,360 --> 00:06:51,680
Speaker 1: the Tragedy Department has been doing and could, in my opinion,

119
00:06:52,000 --> 00:06:55,640
Speaker 1: pursue fall more aggressively. The treasure debts not callable. It's

120
00:06:55,640 --> 00:06:58,640
Speaker 1: full faith in credit. You can't tear up someone's old

121
00:06:58,680 --> 00:07:00,720
Speaker 1: note and replace it with a new low interest rate.

122
00:07:00,760 --> 00:07:02,800
Speaker 1: Now that that's just simply not feasible. It doesn't matter

123
00:07:02,880 --> 00:07:06,600
Speaker 1: what he thinks. It's not legally feasible. But you can

124
00:07:06,800 --> 00:07:10,080
Speaker 1: lengthen the maturity of the debt. Now, one of the

125
00:07:10,080 --> 00:07:14,720
Speaker 1: interest things is if you look talked to an academic

126
00:07:14,800 --> 00:07:22,440
Speaker 1: on the FED, good friend from Pittsburgh, Carnegie Mellon, and

127
00:07:22,440 --> 00:07:26,480
Speaker 1: and he will say he will put together, um mon,

128
00:07:26,600 --> 00:07:28,760
Speaker 1: good friends have put together the Central Bank and the

129
00:07:28,800 --> 00:07:32,440
Speaker 1: Treasury Marvin good friend here, yes, and then you can

130
00:07:32,520 --> 00:07:35,800
Speaker 1: then you can look at monetary policy in fiscal policy

131
00:07:35,840 --> 00:07:37,760
Speaker 1: and combine it. And so what was the Fed doing

132
00:07:38,120 --> 00:07:40,520
Speaker 1: It was short in the duration of the debt by

133
00:07:40,600 --> 00:07:43,800
Speaker 1: operation twist, as the treasure was trying to lengthen the

134
00:07:43,840 --> 00:07:47,880
Speaker 1: maturity of debt, and those two policies cancel each other out.

135
00:07:48,000 --> 00:07:50,520
Speaker 1: So yes, I would lengthen the maturity of the debt

136
00:07:50,520 --> 00:07:53,400
Speaker 1: because I certainly as an investor, would not want to

137
00:07:53,440 --> 00:07:56,400
Speaker 1: invest for ten years at one point. Peter Fisher Blackstone

138
00:07:56,480 --> 00:07:58,840
Speaker 1: is really good at this, and of course I call

139
00:07:58,960 --> 00:08:02,720
Speaker 1: him the tripod guy. He's served government, he served Wall Street,

140
00:08:02,960 --> 00:08:06,360
Speaker 1: and he's got terrific academic bearing as well. He's a

141
00:08:06,360 --> 00:08:12,440
Speaker 1: bit cautious about Europe. Europe, if you will, the europeanization

142
00:08:13,040 --> 00:08:15,560
Speaker 1: of our death structure France, as I believe a fifty

143
00:08:15,640 --> 00:08:18,600
Speaker 1: year piece. We don't do that in America because we're better.

144
00:08:18,800 --> 00:08:21,720
Speaker 1: What's the price of going from a blended debt to

145
00:08:21,760 --> 00:08:24,480
Speaker 1: pick a number seven years out to a blended debt

146
00:08:24,480 --> 00:08:27,160
Speaker 1: of ten years or fifteen years. Well, I think at

147
00:08:27,200 --> 00:08:30,440
Speaker 1: these low interest rates for the government, there's there's very

148
00:08:30,560 --> 00:08:34,400
Speaker 1: little price except ten years down the road when you

149
00:08:34,640 --> 00:08:37,280
Speaker 1: if you had a huge amount of debt to be

150
00:08:37,559 --> 00:08:40,120
Speaker 1: refunded at that particular point in time, and we're in

151
00:08:40,200 --> 00:08:43,760
Speaker 1: a very different interest rates environment, and and that's the

152
00:08:43,760 --> 00:08:46,280
Speaker 1: the price will come at a future point where we

153
00:08:46,320 --> 00:08:48,319
Speaker 1: won't know where, we won't know what it is. And

154
00:08:48,400 --> 00:08:51,280
Speaker 1: the whole idea about issuing along the curve is not

155
00:08:51,400 --> 00:08:54,800
Speaker 1: so much about minimizing interest rate costs, but is not

156
00:08:54,880 --> 00:08:57,680
Speaker 1: having any great big refunding coming up. And then let's

157
00:08:57,679 --> 00:08:59,719
Speaker 1: takes us back to the full faith and credit ten

158
00:08:59,800 --> 00:09:03,800
Speaker 1: year yield. Do you perceive institutions that could give us

159
00:09:03,840 --> 00:09:07,640
Speaker 1: a glide path to higher yields or by definition, do

160
00:09:07,720 --> 00:09:10,319
Speaker 1: we have to have a jump condition when the shotgun

161
00:09:10,360 --> 00:09:14,960
Speaker 1: aw comes that we're actually gonna have normal interest rates. UM.

162
00:09:15,040 --> 00:09:19,440
Speaker 1: I think we could have a glide path, but markets

163
00:09:19,480 --> 00:09:21,880
Speaker 1: never tend to wear it that way. But what would

164
00:09:21,880 --> 00:09:25,679
Speaker 1: help is if the FED began to unwind its portfolio,

165
00:09:25,800 --> 00:09:29,480
Speaker 1: at least stop reinvesting and start allowing it to shift

166
00:09:29,559 --> 00:09:35,200
Speaker 1: the assets back into the private sector in a gradual manner.

167
00:09:36,360 --> 00:09:40,280
Speaker 1: But the FEDS seems intent to hold onto its UH

168
00:09:40,280 --> 00:09:45,320
Speaker 1: portfolio until maturity, and maybe that helps with the glide path,

169
00:09:45,440 --> 00:09:50,760
Speaker 1: but it keeps the market from adjusting. John writing with

170
00:09:50,840 --> 00:09:53,240
Speaker 1: this with our d Q economics, and we will continue this.

171
00:09:53,360 --> 00:09:57,719
Speaker 1: There are headlines out of Lending Club. They have been

172
00:09:57,760 --> 00:10:01,240
Speaker 1: in the news and it's been challenging news, to say

173
00:10:01,280 --> 00:10:05,440
Speaker 1: the least. The Lending Club chairman and chief executive Officer,

174
00:10:05,559 --> 00:10:11,080
Speaker 1: Renold Laplanche resigns. Hans Morris is named chairman, but very

175
00:10:11,120 --> 00:10:17,040
Speaker 1: importantly Scott Sandborn will serve as acting CEO. They will

176
00:10:17,080 --> 00:10:20,719
Speaker 1: not provide guidance at this time. That's probably the key headline.

177
00:10:21,120 --> 00:10:23,280
Speaker 1: Things are so messed up. They got to sort out

178
00:10:23,320 --> 00:10:26,840
Speaker 1: what's going on in their lending club. The violation of

179
00:10:26,880 --> 00:10:32,040
Speaker 1: practices and a lack of disclosure is unacceptable. Lending Club

180
00:10:32,080 --> 00:10:35,280
Speaker 1: of previous seven dollars ten cents is giving me an

181
00:10:35,280 --> 00:10:38,400
Speaker 1: indication self will try to firm up that bid. An

182
00:10:38,400 --> 00:10:41,880
Speaker 1: ask on lending Club as well. Again, the present chairman

183
00:10:41,880 --> 00:10:45,400
Speaker 1: and CEO of Lending Club resigns. Shootures of five down,

184
00:10:45,480 --> 00:10:49,080
Speaker 1: futures of forty one the yield one point seven seven percent.

185
00:10:52,800 --> 00:10:54,640
Speaker 1: Check in with Michael Byer and get the latest World

186
00:10:54,640 --> 00:10:57,199
Speaker 1: and Nashelle headlines. Michael Mike time, thank you very much.

187
00:10:57,240 --> 00:11:00,480
Speaker 1: British Prime Minister David Cameron called on Britain's not to

188
00:11:00,600 --> 00:11:04,079
Speaker 1: vote to leave the European Union next month. Cameron, in

189
00:11:04,120 --> 00:11:07,440
Speaker 1: a speech at the British Museum in Central London today,

190
00:11:07,720 --> 00:11:11,400
Speaker 1: says leaving the EU is genuinely a leap in the dark.

191
00:11:12,080 --> 00:11:15,520
Speaker 1: Mexican government officials say the new Mexican prison holding convicted

192
00:11:15,600 --> 00:11:19,240
Speaker 1: drug lord La Kina l Chapo Guzman is rated as

193
00:11:19,280 --> 00:11:24,240
Speaker 1: the worst in the country's federal penitentiary system for inmate conditions. However,

194
00:11:24,600 --> 00:11:28,040
Speaker 1: the former head of the International operations for the US

195
00:11:28,160 --> 00:11:32,160
Speaker 1: Drug Enforcement Agency questions sending Guzman to a less secure

196
00:11:32,200 --> 00:11:35,640
Speaker 1: prison that is in the territory firmly controlled by his empire.

197
00:11:36,080 --> 00:11:39,400
Speaker 1: Officials in Alberta, Canada say a forecast for cooler temperatures

198
00:11:39,400 --> 00:11:42,400
Speaker 1: and light rain will help them corral and enormous wildfire.

199
00:11:42,760 --> 00:11:47,119
Speaker 1: Global News twenty four hours a day, powered by our journalists.

200
00:11:47,160 --> 00:11:49,480
Speaker 1: I'm Michael barn Time and Mecha, thanks so much. In

201
00:11:49,480 --> 00:11:52,600
Speaker 1: a currency front, yend weaker and dramatically weaker over two

202
00:11:52,640 --> 00:11:56,960
Speaker 1: three days one oh eight point zero nine point of

203
00:11:57,000 --> 00:12:00,800
Speaker 1: note as a dollar shows modest strength x Y with

204
00:12:01,040 --> 00:12:08,079
Speaker 1: John riding Bloomberg Surveillance Bloomberg surveillance by by sector spider

205
00:12:08,160 --> 00:12:10,000
Speaker 1: et s y by a single stock when you can

206
00:12:10,000 --> 00:12:13,280
Speaker 1: invest in the entire sector, Visit sector spdrs dot com

207
00:12:13,400 --> 00:12:16,000
Speaker 1: or call one eight six six Sector e t F.

208
00:12:23,440 --> 00:12:26,719
Speaker 1: This is Bloomberg surveillance way tech. The view that as

209
00:12:26,720 --> 00:12:29,520
Speaker 1: the FED raises rights, that removes the US dollar liquidity

210
00:12:29,559 --> 00:12:31,400
Speaker 1: from the rest of the world. Sixty percent of global

211
00:12:31,480 --> 00:12:33,560
Speaker 1: j DP relies on U s TOL liquidity. At the

212
00:12:33,600 --> 00:12:39,000
Speaker 1: bottom have basically seen their income stagnate over a third

213
00:12:39,000 --> 00:12:41,280
Speaker 1: of a century. The Asian economies there are the fastest

214
00:12:41,320 --> 00:12:43,839
Speaker 1: growing ones in the world. China's Both may be slowing down,

215
00:12:43,920 --> 00:12:46,080
Speaker 1: but we're still talking about China growing at six and

216
00:12:46,080 --> 00:12:49,480
Speaker 1: a half seven percent Bloomberg Surveillance your link to the

217
00:12:49,520 --> 00:12:55,240
Speaker 1: world of economics, finance, and investment on Bloomberg Radio. Good morning,

218
00:12:55,240 --> 00:12:57,679
Speaker 1: It is seven am on Wall Street. It is five

219
00:12:57,720 --> 00:13:01,520
Speaker 1: am in Fort McMurray, Canada, where we wish the firefighters

220
00:13:01,559 --> 00:13:03,959
Speaker 1: battling that huge blaze up there. The best oil higher

221
00:13:04,000 --> 00:13:07,640
Speaker 1: this morning, in part on concerns of interruptions to the

222
00:13:07,679 --> 00:13:11,839
Speaker 1: supply from Canada. West Texas two is up two point two.

223
00:13:12,640 --> 00:13:17,240
Speaker 1: Brent nine up one point six percent this morning. But

224
00:13:17,320 --> 00:13:21,600
Speaker 1: actually pretty much everything is higher this morning. By the way,

225
00:13:21,640 --> 00:13:24,760
Speaker 1: I'm Michael McGee along with Tom Keene Unsurveillance today and

226
00:13:24,760 --> 00:13:27,760
Speaker 1: we're watching a global rally overnight. Asia up and now

227
00:13:27,800 --> 00:13:30,600
Speaker 1: you're up. The stock six d four points higher one

228
00:13:30,640 --> 00:13:34,120
Speaker 1: point two percent, the docks in Germany up one eight points.

229
00:13:34,120 --> 00:13:37,160
Speaker 1: That's one point eight percent in London, a thirty point

230
00:13:37,160 --> 00:13:39,760
Speaker 1: game for the footsie half a percent of the day.

231
00:13:39,800 --> 00:13:45,120
Speaker 1: Bonds little changed to hire. The curve steepens. The two

232
00:13:45,200 --> 00:13:48,040
Speaker 1: year note yield is at seventy three basis points, five

233
00:13:48,120 --> 00:13:50,720
Speaker 1: year one point to two, and the ten year one

234
00:13:50,760 --> 00:13:54,959
Speaker 1: point seven seven. On the day, the dollars stronger. Here's

235
00:13:54,960 --> 00:13:59,360
Speaker 1: the real debate point the dollar following comments, and the

236
00:13:59,760 --> 00:14:03,559
Speaker 1: job report falling comments from the Fed moving higher today

237
00:14:03,280 --> 00:14:07,480
Speaker 1: nine for the d X y index, the yen weekends

238
00:14:07,520 --> 00:14:11,400
Speaker 1: to one oh oh four, the year one eight, and

239
00:14:11,480 --> 00:14:16,080
Speaker 1: the pound one four fifty one. So that's the question

240
00:14:16,280 --> 00:14:19,240
Speaker 1: whether interest rates in the United States and whether the

241
00:14:19,360 --> 00:14:24,280
Speaker 1: dollar and bond market. We have seen FED officials the latest,

242
00:14:24,560 --> 00:14:26,800
Speaker 1: Bill Dudley this morning time in the New York Times

243
00:14:27,040 --> 00:14:30,320
Speaker 1: saying we're still on track for June if the numbers

244
00:14:30,360 --> 00:14:32,160
Speaker 1: continue the way they are. But that's not the way

245
00:14:32,200 --> 00:14:35,720
Speaker 1: the bond market sees it. John Riding is the chief

246
00:14:35,720 --> 00:14:39,120
Speaker 1: economist and founder of r t Q Economics. John, there's

247
00:14:39,160 --> 00:14:41,840
Speaker 1: an old saying, don't fight the Fed, and it seems

248
00:14:41,880 --> 00:14:45,520
Speaker 1: that people on bond trading desks have decided they want

249
00:14:45,560 --> 00:14:49,120
Speaker 1: to get into a scrap with the U s. Central Bank. Well,

250
00:14:49,120 --> 00:14:52,840
Speaker 1: the problem is the fattest completely messed up its communications

251
00:14:52,880 --> 00:14:57,640
Speaker 1: policy and uh. It told us it had objectives for

252
00:14:57,680 --> 00:15:01,720
Speaker 1: our unemployment inflation uh, and then as we got close

253
00:15:01,760 --> 00:15:04,200
Speaker 1: to those, it lowered the unemployment rate. So that the

254
00:15:04,240 --> 00:15:06,600
Speaker 1: market simply doesn't believe the Fed. And I think that

255
00:15:06,680 --> 00:15:09,360
Speaker 1: to believe the Fed, Janet Yellen has to come out

256
00:15:09,400 --> 00:15:13,080
Speaker 1: and deliver a similar message, And as I said to

257
00:15:13,080 --> 00:15:15,440
Speaker 1: Tom on TV a few minutes, you say to me

258
00:15:15,560 --> 00:15:19,880
Speaker 1: right now to um what we have here is typically

259
00:15:20,040 --> 00:15:23,880
Speaker 1: that the central uh, the Chairman of the FED, goes

260
00:15:23,920 --> 00:15:26,000
Speaker 1: in May and gives a testimony. So she can be

261
00:15:26,080 --> 00:15:29,080
Speaker 1: perfectly tied up to say not that we're going in June,

262
00:15:29,440 --> 00:15:33,480
Speaker 1: but that we are still committed to renormalizing monetary policy,

263
00:15:33,880 --> 00:15:36,280
Speaker 1: and the data points are close, and if we continue

264
00:15:36,280 --> 00:15:38,520
Speaker 1: in that direction, we will go. Because the Fed in

265
00:15:38,560 --> 00:15:42,160
Speaker 1: the past talked about cumulative improvement, and cumulative improvement has

266
00:15:42,360 --> 00:15:45,800
Speaker 1: actual progress. One quote, if I'm exactly not just the

267
00:15:45,920 --> 00:15:48,600
Speaker 1: latest data point, CU want of improvement from a ten

268
00:15:48,640 --> 00:15:52,280
Speaker 1: percent unemployment rate to a five percent unemployment rate. John

269
00:15:52,320 --> 00:15:54,560
Speaker 1: writing with the rd Q Economics, we say good morning

270
00:15:54,560 --> 00:15:57,640
Speaker 1: to all of your worldwide Bloomberg Radio Plus and of

271
00:15:57,680 --> 00:16:02,720
Speaker 1: course across Bloomberg dot com Bloomberg Surveillance. This morning brought

272
00:16:02,720 --> 00:16:07,240
Speaker 1: you by Investco. Factor based strategies can help investors focus

273
00:16:07,320 --> 00:16:12,600
Speaker 1: on high quality, low volatility and more. Learn more at

274
00:16:13,080 --> 00:16:17,240
Speaker 1: investco dot com slash High Conviction Generating. Giving his great

275
00:16:17,280 --> 00:16:21,400
Speaker 1: perspective this morning, John, as I mentioned earlier, your note

276
00:16:21,520 --> 00:16:26,280
Speaker 1: had a certain heat on Friday. Let's frame the two

277
00:16:26,440 --> 00:16:29,200
Speaker 1: avenues out of the jobs report. One is it was

278
00:16:29,240 --> 00:16:31,400
Speaker 1: a molding number. We all agree on this with a

279
00:16:31,480 --> 00:16:35,400
Speaker 1: molding revision. And then there's the yeah, but the underlying

280
00:16:35,480 --> 00:16:39,760
Speaker 1: data was actually pretty good. Explained to us why hours

281
00:16:40,000 --> 00:16:43,920
Speaker 1: worked in wages can trump? That was a pun there, thanking?

282
00:16:44,000 --> 00:16:46,240
Speaker 1: Did you like that? That was a very Did you

283
00:16:46,280 --> 00:16:48,760
Speaker 1: see how we did that? Can trump get it? Can

284
00:16:48,800 --> 00:16:52,560
Speaker 1: trump the accountables of non farm payrolls. Can we start

285
00:16:52,640 --> 00:16:55,000
Speaker 1: for the non fund payroll number? Because our number for

286
00:16:55,080 --> 00:16:57,560
Speaker 1: private paerallels was a hundred and seventy five thousand, we

287
00:16:57,600 --> 00:17:01,840
Speaker 1: got a hundred and seventy one thousand. Why because we

288
00:17:01,960 --> 00:17:05,560
Speaker 1: had such a mild winter that the pickup in jobs

289
00:17:05,600 --> 00:17:08,080
Speaker 1: that normally take place because people couldn't work because the

290
00:17:08,160 --> 00:17:11,399
Speaker 1: weather is so bad in February and March the season,

291
00:17:12,160 --> 00:17:15,159
Speaker 1: they were already working, and so we had a hundred

292
00:17:15,160 --> 00:17:18,800
Speaker 1: and sixty thousand three month averages around two hundred thousand.

293
00:17:19,760 --> 00:17:23,159
Speaker 1: I think that the the FED forecast revision calls by

294
00:17:23,160 --> 00:17:26,280
Speaker 1: economists on Friday at some major banks were like looking

295
00:17:26,280 --> 00:17:28,000
Speaker 1: for an excuse to come to the market, and I

296
00:17:28,000 --> 00:17:31,520
Speaker 1: think it ridiculously over emphasizes the latest data point. But

297
00:17:31,880 --> 00:17:34,600
Speaker 1: the threat in the last statement talks about consumer fundamentals

298
00:17:34,600 --> 00:17:37,400
Speaker 1: as well. So you've got an increase in hours worked

299
00:17:37,880 --> 00:17:40,320
Speaker 1: because we had a longer work weed of four tenths

300
00:17:40,400 --> 00:17:42,159
Speaker 1: of per percent, we had a three tenths of per

301
00:17:42,160 --> 00:17:45,879
Speaker 1: percent increase in wages. That's the seven tenths of per

302
00:17:45,920 --> 00:17:49,520
Speaker 1: percent increases running somewhere between eight or around eight percent

303
00:17:49,680 --> 00:17:52,439
Speaker 1: at an annualized rate if we were to continue that

304
00:17:52,640 --> 00:17:55,920
Speaker 1: in wage income, which is the bulk of what people

305
00:17:55,960 --> 00:17:58,280
Speaker 1: have to spend. So if you're a Kanzian and you're

306
00:17:58,320 --> 00:18:00,879
Speaker 1: worried about demand and you're worried about the consumer, you

307
00:18:00,960 --> 00:18:05,080
Speaker 1: have this big income incre John writing with this with

308
00:18:05,200 --> 00:18:07,200
Speaker 1: his work at the Bank of England, at the Federal

309
00:18:07,200 --> 00:18:09,719
Speaker 1: Reserve System, of course with Bear Stearns for years, and

310
00:18:10,200 --> 00:18:13,400
Speaker 1: now at our DQ economics, John, I'm gonna massively rip

311
00:18:13,480 --> 00:18:16,080
Speaker 1: up the script here. Greg Valier has given us great

312
00:18:16,760 --> 00:18:21,520
Speaker 1: perspective on our economic politics. Valier has been writing stunning

313
00:18:21,600 --> 00:18:26,800
Speaker 1: political notes about Secretary Clinton and particularly Mr Trump. Here's

314
00:18:26,880 --> 00:18:31,479
Speaker 1: Valier this morning on debt restructuring and Donald Trump quote.

315
00:18:31,920 --> 00:18:35,600
Speaker 1: He's playing with matches in a very arid forest. The

316
00:18:35,720 --> 00:18:38,880
Speaker 1: US and much of the world is crushed by individual

317
00:18:39,000 --> 00:18:42,640
Speaker 1: and government debt. So here comes someone with catnip. Let's

318
00:18:42,680 --> 00:18:47,840
Speaker 1: restructure the debt? Is it even feasible? Within the economics

319
00:18:47,840 --> 00:18:51,280
Speaker 1: and the chapters in our economic textbook on debt restructuring

320
00:18:51,720 --> 00:18:55,760
Speaker 1: that you can restructure quote unquote full faith and credit

321
00:18:55,840 --> 00:18:59,600
Speaker 1: debt like you'd restructure a hotel in Atlantic City. No,

322
00:18:59,680 --> 00:19:02,240
Speaker 1: you are. But what you can do is lengthen the

323
00:19:02,280 --> 00:19:06,960
Speaker 1: maturity of the debt at these very low interest rates.

324
00:19:07,040 --> 00:19:09,520
Speaker 1: And that has been a policy that the Treasury Department

325
00:19:09,600 --> 00:19:12,920
Speaker 1: has been doing and could, in my opinion, pursue far

326
00:19:12,960 --> 00:19:16,280
Speaker 1: more aggressively. The treasure debts not callable. It's full faith

327
00:19:16,280 --> 00:19:19,080
Speaker 1: in credit. You can't tear up someone's old note and

328
00:19:19,160 --> 00:19:21,240
Speaker 1: replace it with a new low interest rate. Now that

329
00:19:21,240 --> 00:19:23,760
Speaker 1: that's just simply not feasible. It doesn't matter what he thinks.

330
00:19:24,160 --> 00:19:27,960
Speaker 1: It's not legally feasible. But you can lengthen the maturity

331
00:19:28,000 --> 00:19:30,919
Speaker 1: of the debt. Now, one of the interesting things is

332
00:19:32,359 --> 00:19:35,360
Speaker 1: if you look talk to an academic on the FED

333
00:19:36,280 --> 00:19:43,720
Speaker 1: good Friend from Pittsburgh Carnegie Mellon and and he will

334
00:19:43,760 --> 00:19:47,480
Speaker 1: say he'll put together um more good friends have put

335
00:19:47,520 --> 00:19:51,040
Speaker 1: together the Central Bank and the Treasury about Marvin good Friend, Yes,

336
00:19:52,080 --> 00:19:53,920
Speaker 1: and then you can then you can look at monetary

337
00:19:53,920 --> 00:19:57,119
Speaker 1: policy in fiscal policy and combine it. And so what

338
00:19:57,200 --> 00:20:00,159
Speaker 1: was the Fed doing It was shortening the duration the

339
00:20:00,200 --> 00:20:03,359
Speaker 1: debt by operation twist, as the treasure was trying to

340
00:20:03,480 --> 00:20:07,600
Speaker 1: lengthen the maturity debt, and those two policies cancel each

341
00:20:07,600 --> 00:20:10,280
Speaker 1: other out. So yes, I would lengthen the maturity of

342
00:20:10,320 --> 00:20:13,240
Speaker 1: the debt because I certainly as an investor, would not

343
00:20:13,280 --> 00:20:15,440
Speaker 1: want to invest for ten years at one point. Peter

344
00:20:15,560 --> 00:20:18,480
Speaker 1: Fisher Blackstone is is really good at this, and of

345
00:20:18,480 --> 00:20:21,280
Speaker 1: course I call him the tripod guy. He's served government,

346
00:20:21,600 --> 00:20:25,040
Speaker 1: he served Wall Street, and he's got terrific academic bearing

347
00:20:25,400 --> 00:20:30,560
Speaker 1: as well. He's a bit cautious about Europe. Europe, if

348
00:20:30,600 --> 00:20:34,840
Speaker 1: you will, the europeanization of our debt structure France, as

349
00:20:34,880 --> 00:20:37,040
Speaker 1: I believe a fifty year piece. We don't do that

350
00:20:37,080 --> 00:20:40,640
Speaker 1: in America because we're better. What's the price of going

351
00:20:40,720 --> 00:20:43,520
Speaker 1: from a blended debt to pick a number seven years

352
00:20:43,520 --> 00:20:46,760
Speaker 1: out to a blended debt of ten years or fifteen years. Well,

353
00:20:46,800 --> 00:20:48,959
Speaker 1: I think at these low interest rates for the government,

354
00:20:49,000 --> 00:20:53,439
Speaker 1: there's there's very little price except ten years down the

355
00:20:53,520 --> 00:20:56,560
Speaker 1: road when you if you had a huge amount of

356
00:20:56,600 --> 00:20:59,920
Speaker 1: debt to be refunded at that particular point in time.

357
00:21:00,080 --> 00:21:03,080
Speaker 1: We're in a very different interest rate environment and and

358
00:21:03,119 --> 00:21:05,480
Speaker 1: that's the problem. But the price will come at a

359
00:21:05,520 --> 00:21:07,960
Speaker 1: future point where we won't know where, we won't know

360
00:21:08,000 --> 00:21:10,399
Speaker 1: what it is. And the whole idea about issuing along

361
00:21:10,400 --> 00:21:13,760
Speaker 1: the curve is not so much about minimizing interest rate costs,

362
00:21:13,800 --> 00:21:17,239
Speaker 1: but is not having any great, big refunding coming up.

363
00:21:17,320 --> 00:21:19,120
Speaker 1: And then let's take this back to the full faith

364
00:21:19,200 --> 00:21:23,520
Speaker 1: and credit tenure yield. Do you perceive institutions that could

365
00:21:23,520 --> 00:21:27,600
Speaker 1: give us a glide path to higher yields or by definition,

366
00:21:27,680 --> 00:21:30,000
Speaker 1: do we have to have a jump condition when the

367
00:21:30,040 --> 00:21:33,080
Speaker 1: shot gun aw comes that we're actually gonna have normal

368
00:21:33,119 --> 00:21:37,520
Speaker 1: interest rates. Um, I think we could have a glide path,

369
00:21:37,680 --> 00:21:41,600
Speaker 1: but markets never tend to work that way. But what

370
00:21:41,720 --> 00:21:45,800
Speaker 1: would help is if the FED began to unwind its portfolio,

371
00:21:45,920 --> 00:21:49,119
Speaker 1: but at least stop reinvesting and start allowing it to

372
00:21:49,240 --> 00:21:53,640
Speaker 1: shift the assets back into the private sector in a

373
00:21:53,680 --> 00:21:59,240
Speaker 1: gradual manner. But the FEDS seems intent to hold onto

374
00:21:59,280 --> 00:22:04,840
Speaker 1: its at portfolio until maturity. And maybe that helps with

375
00:22:04,840 --> 00:22:09,240
Speaker 1: the bly path, but it keeps they market from adjusting.

376
00:22:10,240 --> 00:22:12,359
Speaker 1: John Riding with us with our d Q economics and

377
00:22:12,400 --> 00:22:17,040
Speaker 1: we will continue this. There are headlines out of Lending Club.

378
00:22:17,320 --> 00:22:20,600
Speaker 1: They have been in the news and it's been challenging

379
00:22:20,640 --> 00:22:24,199
Speaker 1: news to say the least. The Lending Club chairman and

380
00:22:24,280 --> 00:22:30,240
Speaker 1: Chief executive Officer Renold Laplanche resigns. Hans Morris is named chairman,

381
00:22:30,720 --> 00:22:35,879
Speaker 1: but very importantly Scott Sandborn will serve as acting CEO.

382
00:22:36,760 --> 00:22:39,800
Speaker 1: They will not provide guidance at this time. That's probably

383
00:22:39,800 --> 00:22:42,760
Speaker 1: the key headline. Things are so messed up. They got

384
00:22:42,760 --> 00:22:46,040
Speaker 1: to sort out what's going on in their lending club.

385
00:22:46,160 --> 00:22:50,879
Speaker 1: The violation of practices and a lack of disclosure is unacceptable.

386
00:22:51,520 --> 00:22:55,160
Speaker 1: Lending Club a previous seven dollars ten cents is giving

387
00:22:55,160 --> 00:22:57,960
Speaker 1: me an indication self. We'll try to firm up that

388
00:22:58,119 --> 00:23:00,840
Speaker 1: bid an ask on Lending Club as well. Again, the

389
00:23:00,920 --> 00:23:04,960
Speaker 1: present chairman and CEO of Lending Club resigns. Futures of

390
00:23:05,040 --> 00:23:08,080
Speaker 1: five down, futures of forty one, the yield one point

391
00:23:08,119 --> 00:23:14,080
Speaker 1: seven seven. To check in with Michael Barr and get

392
00:23:14,080 --> 00:23:16,760
Speaker 1: the latest world and national headlines. Michael, Mike time, thank

393
00:23:16,760 --> 00:23:19,560
Speaker 1: you very much. British Prime Minister David Cameron called on

394
00:23:19,640 --> 00:23:24,120
Speaker 1: Britain's not to vote to leave the European Union next month. Cameron,

395
00:23:24,160 --> 00:23:27,560
Speaker 1: in a speech at the British Museum in Central London today,

396
00:23:27,840 --> 00:23:31,560
Speaker 1: says leaving the EU is genuinely a leap in the dark.

397
00:23:32,160 --> 00:23:35,640
Speaker 1: Mexican government officials say the new Mexican prison holding convicted

398
00:23:35,720 --> 00:23:39,480
Speaker 1: drug lord Lakina L Chapo Guzman is rated as the

399
00:23:39,600 --> 00:23:44,360
Speaker 1: worst in the country's federal penitentiary system for inmate conditions. However,

400
00:23:44,720 --> 00:23:48,159
Speaker 1: the former head of the international operations for the US

401
00:23:48,280 --> 00:23:52,280
Speaker 1: Drug Enforcement Agency questions sending Guzman to a less secure

402
00:23:52,320 --> 00:23:55,760
Speaker 1: prison that is in the territory firmly controlled by his empire.

403
00:23:56,200 --> 00:23:59,520
Speaker 1: Officials in Alberta, Canada say a forecast for cooler temperatures

404
00:23:59,520 --> 00:24:03,280
Speaker 1: and light will help them corral and enormous wildfire. Global

405
00:24:03,359 --> 00:24:07,240
Speaker 1: News twenty four hours a day, powered by our journalists.

406
00:24:07,280 --> 00:24:09,639
Speaker 1: I'm Michael Barr and Meca thinks so much. On the

407
00:24:09,760 --> 00:24:13,359
Speaker 1: currency front, yend weaker and dramatically weaker over two three days,

408
00:24:13,400 --> 00:24:17,480
Speaker 1: one oh eight point zero nine point of note as

409
00:24:17,480 --> 00:24:20,960
Speaker 1: a dollar shows modest strength on d x Y with

410
00:24:21,160 --> 00:24:27,920
Speaker 1: John riding Bloomberg Surveillance. Bloomberg Surveillance brought you by Sector

411
00:24:27,920 --> 00:24:29,960
Speaker 1: Spider et s y by a single stock when you

412
00:24:29,960 --> 00:24:32,920
Speaker 1: can invest in the entire sector of visit sector spdrs

413
00:24:33,000 --> 00:24:35,639
Speaker 1: dot com or call one eight six six sector e

414
00:24:35,760 --> 00:24:36,080
Speaker 1: t S