WEBVTT - Sinche: the dollar will creep gradually higher on better data

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<v Speaker 1>This is Bloomberg Surveillance. I would expect the interest rate

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<v Speaker 1>in the Eurozone and it's peripheral will be zero or

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<v Speaker 1>lower for the rest of this decade. The sector selection

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<v Speaker 1>does matter. A whole lot of you avoided energy last year,

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<v Speaker 1>you probably did relatively well. It's half the global economy

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<v Speaker 1>and it's all slowing. My sense is that this ship

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<v Speaker 1>things will start to turnarine, and I think that turnarine

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<v Speaker 1>will be left by China. Bloomberg Surveillance your link to

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<v Speaker 1>the world of economics, finance, and investment on Bloomberg Radio.

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<v Speaker 1>Good morning everyone, Michael McCain, tom Kin, Bloomberg Surveillance Worldwide.

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<v Speaker 1>Thrilled to have you with us. End of the quarter.

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<v Speaker 1>I am in April Fool's Day training. Every year I

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<v Speaker 1>get killed by my team. They just crush me. They

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<v Speaker 1>get me so angry with such stupidity. John. One year

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<v Speaker 1>you brought in my one oh one k, you know,

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<v Speaker 1>retirement wrap up, and I went April. You went April Fools.

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<v Speaker 1>It's worse, actually, but then Aways, we're getting ready for that.

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<v Speaker 1>Our April Fools is to bring you Barry Dholes four

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<v Speaker 1>days in a row, five gonna make a full week

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<v Speaker 1>of of you having to endure my snowfulist meloflist Nasal Twine.

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<v Speaker 1>I'm glad you can pronounce it. I can't job to

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<v Speaker 1>day Tomorrow Berry Ridholds and I will have Jim Glass

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<v Speaker 1>who Bill Gross with us as well. Bloomert Surveillance this

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<v Speaker 1>morning brought you by Investco. Don't settle for average in

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<v Speaker 1>your portfolio. To Investco, the right approach means investing with

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<v Speaker 1>high conviction. Find out more investco dot com slash high Conviction.

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<v Speaker 1>One of my great high points this week, among many,

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<v Speaker 1>was meeting with Megan Walsh of Investco. They've been great supporters.

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<v Speaker 1>Her performance in dividend long only by side investing is

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<v Speaker 1>lights out phenomenal. It was jaw dropping to look at

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<v Speaker 1>her upper death style consistency against her peer group individends.

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<v Speaker 1>So it's great to speak with Investco and thank you

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<v Speaker 1>to them for their support. Barry, we need somebody to

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<v Speaker 1>synthesize where we are in the reset from his blinding

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<v Speaker 1>certitude of twelve three one fifteen. Robert since joins us

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<v Speaker 1>from Ammer's pierpond. What'd you get most wrong this quarter? Um?

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<v Speaker 1>You know we expected a little bit of a setback

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<v Speaker 1>for the dollar. I don't think we expected it to

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<v Speaker 1>settle back quite this much UM. And also we uh,

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<v Speaker 1>we didn't think yelling would be quite as dubblish as

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<v Speaker 1>she really is. We probably should learn that lesson. But uh,

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<v Speaker 1>as opposed to thinking whether the glass was half full

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<v Speaker 1>or half empty, she took the glass and emptied all

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<v Speaker 1>the water out of it. John Norman a few days

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<v Speaker 1>ago JPM were and recalibrates. He takes dollar optimism down

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<v Speaker 1>to stability, maybe not dollar weakness. Others actually talk about

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<v Speaker 1>dollar weakness. Where where does the dollar go in the

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<v Speaker 1>next three months? You know, we think it's it's headed

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<v Speaker 1>a little bit higher. We look at some of our

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<v Speaker 1>short term valuation work, and it would suggest your dollar

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<v Speaker 1>belongs more in a one oh seven one o nine

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<v Speaker 1>range rather than the one range we're at now. But

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<v Speaker 1>nothing dramatic, you know. But I think the dollar creeps

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<v Speaker 1>gradually higher UM as as we go through the quarter

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<v Speaker 1>UM because we do think the U S date is

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<v Speaker 1>gonna look okay. And and and frankly, I think there

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<v Speaker 1>may be a bit of a attention developing on the

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<v Speaker 1>f O m C. I mean, I think that people

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<v Speaker 1>like UH, like Stan Fisher and a number of the

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<v Speaker 1>folks want to get on with it in terms of

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<v Speaker 1>normalizing interest rates. And I think they may have been

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<v Speaker 1>surprised as the rest of us about this yellow and

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<v Speaker 1>testimony this week. You say, nothing dramatic. You're talking one

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<v Speaker 1>oh seven, one or nine. We're spitting distance from parity

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<v Speaker 1>between the dollar and the euro. If I would have

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<v Speaker 1>mentioned that three or four years ago, people would have

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<v Speaker 1>thought I was out of my mind. Well, I think

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<v Speaker 1>there's there. There are a couple of things that have

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<v Speaker 1>gone on. One. Um, you know, we have seen the

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<v Speaker 1>continued sluggish sluggishness in Europe and a much more aggressive ECB.

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<v Speaker 1>Early on, the e c B was not very aggressive,

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<v Speaker 1>the FED was aggressive, and so the global divergence was

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<v Speaker 1>actually in favor of the euro as opposed to the dollar,

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<v Speaker 1>and it was horribly overvalued. Um and now we've seen

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<v Speaker 1>that adjustment process UH taking place. I think people still

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<v Speaker 1>think fair valuation is somewhere around one fifteen on euro dollar.

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<v Speaker 1>But I think we're gonna undershoot that because the e

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<v Speaker 1>c B, um, you know, will be easy for an

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<v Speaker 1>extended period of time. And and and we think and

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<v Speaker 1>hope the FED does begin to or move further along

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<v Speaker 1>the policy of normalization of interest rates here in the US.

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<v Speaker 1>So we look around the world and we see the

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<v Speaker 1>US dollar versus the Canadian loon versus the Mexican pay

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<v Speaker 1>So we go to Asia, Uh, we're back to an

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<v Speaker 1>era of king dollar, or at least that Howard, That's

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<v Speaker 1>how it feels. Are there any other currencies out there

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<v Speaker 1>that can go head to head with the dollar and

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<v Speaker 1>actually um allow our exporters to to sell into their

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<v Speaker 1>markets at a competitive rate. You know, I think we've

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<v Speaker 1>we've we've had the bulk of the adjustment of the dollar. Uh.

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<v Speaker 1>You know, we're now talking about fine tuning. If we've

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<v Speaker 1>gone from one forty down to roughly one ten on

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<v Speaker 1>euro dollar, enormous, enormous move, big move if we if

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<v Speaker 1>we're one oh five or if one fifteen, that might

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<v Speaker 1>make a big difference from a short term trading perspective,

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<v Speaker 1>But in terms of the big picture, you know, I

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<v Speaker 1>think we've had a big, big part of the dollar

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<v Speaker 1>adjustment already. We've seen US companies have to adjust that,

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<v Speaker 1>We've seen the U S economy have to adjust to that.

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<v Speaker 1>Bob since Jonah switch gears here in Berries are really

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<v Speaker 1>attuned to this as well. You've seen. I mean we're

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<v Speaker 1>talking earlier about bear Stearns A. S. Greenberg with you know,

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<v Speaker 1>his vest On and his paper tickets and Alan Schwartz

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<v Speaker 1>in those days and Bank of America. Has the industry

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<v Speaker 1>been taken over by the whole E T F hedge

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<v Speaker 1>fun very smart guys, not evil people, but people just

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<v Speaker 1>making huge swing trades, if you will, in and out

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<v Speaker 1>of see whatever the theme is of the moment. Yeah,

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<v Speaker 1>I mean, I think that we have built up such

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<v Speaker 1>huge pools of capital that have great demands for short

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<v Speaker 1>term performance that we do tend to see markets that

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<v Speaker 1>are more volatile, particularly commodity markets. You know, commodity markets

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<v Speaker 1>used to be things that that that companies dabbled in,

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<v Speaker 1>you know, that people actually bought and sold this stuff

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<v Speaker 1>to produce something. It's become much more financial. We saw

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<v Speaker 1>this with foreign exchange fifteen or twenty years ago. It

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<v Speaker 1>used to be something that companies used to dabble into

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<v Speaker 1>to satisfy their trade needs. Now it's become much more financial,

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<v Speaker 1>become much more volatile um and I don't think that's

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<v Speaker 1>particularly helpful, helpful and healthy for for the economy in general.

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<v Speaker 1>Per pot we get started on three hours of Bloomberg Radio,

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<v Speaker 1>Charles Evans of Chicago and Kithley News, really a high

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<v Speaker 1>point in the nine o'clock hour as well. Barry So,

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<v Speaker 1>I keep coming back to the strength of the dollar

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<v Speaker 1>and what it means for our overall economy. I was

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<v Speaker 1>in London about a decade ago when I was astonished

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<v Speaker 1>at a forty dollar hamburger at a local pub once

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<v Speaker 1>you figured out the exchange rate. Now it seems the

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<v Speaker 1>US tourists can travel abroad and things are are really

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<v Speaker 1>reasonably priced. What does this mean for global capital flows?

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<v Speaker 1>What does this mean for uh, the overall state of

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<v Speaker 1>the economy with with the US seemingly the only strength

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<v Speaker 1>that's out there. Yeah, you know, I think we're we're

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<v Speaker 1>seeing a shift in in global patterns, some some big

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<v Speaker 1>shifts in global patterns. I think one thing we're seeing

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<v Speaker 1>is that services are becoming a much bigger share of

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<v Speaker 1>the economy globally, which is something you'd expect with an

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<v Speaker 1>aging population, both here in Europe, even in China and

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<v Speaker 1>and and parts of Asia. Um. And that just means

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<v Speaker 1>that we're going to see areas of demand in different

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<v Speaker 1>in different markets. We're seeing the labor markets actually perform

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<v Speaker 1>reasonably well. Um service consumption is very labor oriented. What

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<v Speaker 1>we're not seeing uh doing very well or commodities and

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<v Speaker 1>demand for commodities and and that's because global trade and

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<v Speaker 1>and and frankly, global industrial production growth has slowed down

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<v Speaker 1>very dramatically. So we're consuming fewer things, we're consuming more services.

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<v Speaker 1>That adds the g d P, but it's a different

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<v Speaker 1>kind of g d P. But but within that, and

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<v Speaker 1>I know you come into some a Ford exchange perspective,

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<v Speaker 1>what is your calling commodities? Are they hit bottom? Are

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<v Speaker 1>they in a range? Do we need to further clear markets,

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<v Speaker 1>particularly within you know, obviously oil, but within industrial medals

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<v Speaker 1>as well, like conquer. You know, we've gotten a bit

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<v Speaker 1>of a boost here in in commodities across the boards

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<v Speaker 1>with a week or dollar. I don't think it's real. Um,

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<v Speaker 1>you know, I think if you look at industrial production data,

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<v Speaker 1>I think I looked at twenty five or so major countries.

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<v Speaker 1>I think there were five that had increases on a

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<v Speaker 1>year of a year basis and twenty that had decreases

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<v Speaker 1>on a year of a year basis. That's pretty unprecedented.

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<v Speaker 1>You know, we're not in a recession, but the industrial

0:08:58.440 --> 0:09:01.160
<v Speaker 1>sector probably feels like we are in every sssion. I

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<v Speaker 1>think there's probably some further clearing to take place in

0:09:04.040 --> 0:09:07.000
<v Speaker 1>commodity markets. And what I particularly note is that with

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<v Speaker 1>this weakness in the dollar in the last week or so,

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<v Speaker 1>oil prices haven't gone up. They've actually started to trickle

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<v Speaker 1>back down again. So lower oil prices at a time

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<v Speaker 1>when the dollar is weaker tells me that there's some

0:09:18.520 --> 0:09:22.080
<v Speaker 1>fundamental weakness starting to show up again in UM in

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<v Speaker 1>in the In the one of the last ten days,

0:09:24.000 --> 0:09:26.440
<v Speaker 1>we've moved from a blah range found at oil to

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<v Speaker 1>all of a sudden right up on support. Yeah. I

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<v Speaker 1>mean we've go from low forties were now into the

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<v Speaker 1>mid thirties at a time when the dollar is weakened

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<v Speaker 1>up UM and that that tells me that it's an

0:09:37.040 --> 0:09:41.200
<v Speaker 1>oil move, it's not a dollar general pricing. For the

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<v Speaker 1>update here on three sixteen, very where the quarter go

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<v Speaker 1>uh with the week ago, with the quarter goo, things

0:09:48.679 --> 0:09:51.680
<v Speaker 1>continue to move along. When the news flow is as

0:09:51.720 --> 0:09:55.079
<v Speaker 1>active as it's been this quarter, time just flies by.

0:09:55.240 --> 0:09:57.040
<v Speaker 1>You see that with the South African news and some

0:09:57.080 --> 0:10:02.120
<v Speaker 1>real challenges to their political leadership and the SMP negative outlook,

0:10:02.800 --> 0:10:06.079
<v Speaker 1>the outlook rather turned negative on China in Hong Kong,

0:10:06.120 --> 0:10:09.640
<v Speaker 1>and they're they're like news, their headline news. But it's

0:10:09.679 --> 0:10:13.280
<v Speaker 1>still just part of the swirl. Plus the reality show

0:10:13.440 --> 0:10:17.800
<v Speaker 1>that is US politics. It has been a news cycle

0:10:17.920 --> 0:10:22.200
<v Speaker 1>every hour. It's been NonStop, utter fascination. It's a carrect

0:10:22.360 --> 0:10:25.040
<v Speaker 1>you can't avert your gates. Well, we're gonna continue with

0:10:25.080 --> 0:10:27.640
<v Speaker 1>that again. Charles Evans with Catherine and Angel here that

0:10:27.679 --> 0:10:31.360
<v Speaker 1>on Bloomberg Radio. Uh in about two hours, I'll say

0:10:31.360 --> 0:10:34.560
<v Speaker 1>two and a half hours. Uh. Maybe that's an important interview.

0:10:34.640 --> 0:10:38.000
<v Speaker 1>Is Evans has really been out front on caution on

0:10:38.480 --> 0:10:42.400
<v Speaker 1>a lifting GDP. It hasn't happened, and he looks prescient

0:10:42.480 --> 0:10:45.600
<v Speaker 1>to say the least futures uh flat negative one down,

0:10:45.679 --> 0:10:48.959
<v Speaker 1>futures negative two, yields are in. Yields are lower points

0:10:48.960 --> 0:10:55.120
<v Speaker 1>seven five Bloomberg Samynan's This Morning rutch of by Volvo Cars,

0:10:55.160 --> 0:10:59.240
<v Speaker 1>White Planes. Visit Volvo Cars, White Planes dot Com from

0:10:59.240 --> 0:11:02.160
<v Speaker 1>New York with our news Michael Barr, Tom Berry, thank

0:11:02.200 --> 0:11:04.640
<v Speaker 1>you very much. A two day nuclear security summit kicks

0:11:04.679 --> 0:11:07.760
<v Speaker 1>off today in Washington. The US and leaders from key

0:11:07.800 --> 0:11:11.520
<v Speaker 1>Asian countries will meet to discuss North Korea's nuclear weapons program.

0:11:11.880 --> 0:11:15.440
<v Speaker 1>President Obama will also meet with China's president Ji Jing

0:11:15.480 --> 0:11:19.480
<v Speaker 1>Ping on the sideline to talk about cybersecurity. Republican presidential

0:11:19.520 --> 0:11:23.000
<v Speaker 1>candidate Donald Trump walked back on the comments there would

0:11:23.080 --> 0:11:25.800
<v Speaker 1>have to be some form of punishment for women who

0:11:25.840 --> 0:11:29.160
<v Speaker 1>have abortions if the procedure became illegal in the US.

0:11:29.559 --> 0:11:33.000
<v Speaker 1>Trump later issued a statement saying that abortion providers, not women,

0:11:33.200 --> 0:11:36.000
<v Speaker 1>should be the ones punished. We're learning more about the

0:11:36.040 --> 0:11:39.360
<v Speaker 1>Egyptian man who authorities say hijacked and egypt airplane and

0:11:39.440 --> 0:11:42.360
<v Speaker 1>forced it to land in Cyprus. The man Cypriot ex

0:11:42.440 --> 0:11:45.679
<v Speaker 1>wife says her former act husband is an extremely dangerous

0:11:45.679 --> 0:11:48.679
<v Speaker 1>man who used drugs. Global News twenty four hours a day,

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<v Speaker 1>powered by our journalists. I'm Michael Barr, Tom Berry. Michael,

0:11:53.480 --> 0:11:56.120
<v Speaker 1>thanks so much again. I get a lot of shirting

0:11:56.120 --> 0:12:00.320
<v Speaker 1>going on one twelve thirty four euro one. This is

0:12:00.320 --> 0:12:08.040
<v Speaker 1>Bloomberg Surveillance. Savanllan's quanted by witham Smith and Brown c

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<v Speaker 1>business be in a position of strength experienced the within

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