WEBVTT - Danny Blanchflower on BOE: Big Mistake to Not Cut Rates (Audio)

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<v Speaker 1>Global business news twenty four hours a day at Bloomberg

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<v Speaker 1>This is a Bloomberg Business Flash from Bloomberg World Headquarters.

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<v Speaker 1>I'm Charlie Pellett. The Dow, the SMP, and NEZ DAC

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<v Speaker 1>are all trading higher. Both the Dow and the SMP

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<v Speaker 1>five hunded index trading at a record a ten point

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<v Speaker 1>gain right now for the SMP five hundred index sixty three.

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<v Speaker 1>That is a gain of five tenths of one percent.

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<v Speaker 1>So stocks extending a rally amid corporate results. The point

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<v Speaker 1>to resilience in the global economy. JP Morgan Chase out

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<v Speaker 1>with earnings this morning. It is up by two point

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<v Speaker 1>one percent. The Dow up one hundred thirty two points

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<v Speaker 1>now to eighteen thousand, five hundred four. That's a gain

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<v Speaker 1>of seven tenths of one percent. Nastack up twenty seven,

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<v Speaker 1>a gain thereof six tents of one percent. Gold down

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<v Speaker 1>eleven thirty the ounce the thirteen thirty two, a drop

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<v Speaker 1>there of eight tens of one percent. Crude oil West

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<v Speaker 1>Texas Intermediate up two percent of barrel right now with

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<v Speaker 1>eighty eight cents forty sixty four on West Texas Intermedia Crude.

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<v Speaker 1>I'm Charlie Peloton. That's a Bloomberg business flash. This is

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<v Speaker 1>taking stock with Kathleen Hayes and Pimpbox on Bloomberg Radio.

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<v Speaker 1>Twenty two thousand televisions. Yes, that's how many television's Amazon

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<v Speaker 1>managed to sell by eleven AM Eastern Time on its

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<v Speaker 1>prime sales day. But that number grew to about ninety

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<v Speaker 1>thousand televisions by the end of the year. I mean,

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<v Speaker 1>rather by the end of the day. Indeed, it's possible

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<v Speaker 1>that when all the sales are finally counted for Prime Day,

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<v Speaker 1>some reports estimate that this year's event could reach a

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<v Speaker 1>billion dollars in a single day of sales. Now, a

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<v Speaker 1>lot of that stuff that has purchased those televisions, for example,

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<v Speaker 1>are moved by robots in warehouses. And here to tell

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<v Speaker 1>us more about this is Bruce Wealthy. He is the founder,

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<v Speaker 1>the chairman, and the visionary of Locusts Robotics. Thank you

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<v Speaker 1>very much for being with us, Bruce Welty, All, I

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<v Speaker 1>beg your pardon, Danny Blanche Flower, you're not a robot expert,

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<v Speaker 1>well not really, your pardon. I was so you know,

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<v Speaker 1>I was so hyped by that billion dollars singled sales

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<v Speaker 1>day figure that I've just been focused on on the

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<v Speaker 1>amount of stuff that people are buying, And maybe you

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<v Speaker 1>can talk about that because you're a labor economist. I mean,

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<v Speaker 1>if you could have a billion dollar sales day, what

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<v Speaker 1>does that tell you about the health of the economy. Well,

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<v Speaker 1>I don't know. Billion dollars maybe quite a big number,

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<v Speaker 1>but in the context of central banking, it's not pim

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<v Speaker 1>so I don't know good. I'm not an expert on

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<v Speaker 1>sales at Amazon, but it was really interesting. But I

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<v Speaker 1>came on to talk about central banks, all right, so

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<v Speaker 1>tell us about central banks. In the Bank of England's

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<v Speaker 1>non event today, Well, it's really quite a surprise in

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<v Speaker 1>that it had pretty much been signaled that they were

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<v Speaker 1>going to move, and Cannie had said that everybody was

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<v Speaker 1>thinking it, and the members of the committee would have

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<v Speaker 1>known that. It was a surprise. Not to move. Certainly

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<v Speaker 1>was a surprise to me, especially when you read the minutes.

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<v Speaker 1>If you read the minutes, there's really very little argument

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<v Speaker 1>in there about not acting. It's sort of apocalyptic in

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<v Speaker 1>lots of ways. It says business sentiments collapsing. There's terrible

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<v Speaker 1>evidence from their agents is awful evidence from the housing market.

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<v Speaker 1>The Bank's uncertainty indicator has risen. Um. Basically, it's about

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<v Speaker 1>that they're going to take some time to think and

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<v Speaker 1>move in August because there's a new government and a

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<v Speaker 1>new Chancellor who they have to coordinate with, and he'd

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<v Speaker 1>been in office for twelve hours. So that's a lot

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<v Speaker 1>of the problem. But it's a problem about nobody in

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<v Speaker 1>England really is actually making economic policy. Um, there's chaos

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<v Speaker 1>while there's a chance for you. Danny Blancheflower, you're a

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<v Speaker 1>professor of economics at Dartmouth College, a Bloomberg Television contributing editor,

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<v Speaker 1>and you were on the policy making committee of the

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<v Speaker 1>Bank of England. If if all of this information that

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<v Speaker 1>you're receiving turns out to give you are wrong signal,

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<v Speaker 1>does that mean you need to change your antenna or

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<v Speaker 1>does need to change Well? I think I think if

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<v Speaker 1>you're at a central bank, you always have to worry

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<v Speaker 1>on two sides. You say, if I act and I

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<v Speaker 1>shouldn't have done, what then? But you also think if

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<v Speaker 1>I should have acted and I didn't, what then? And

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<v Speaker 1>the second always looks looks worse. I mean, you have

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<v Speaker 1>a sentence in the in this minute, we said the

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<v Speaker 1>evidence suggested the uncertainty flowing from the Brexit result would

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<v Speaker 1>likely to depress economic activity. Well, then perhaps you you

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<v Speaker 1>should act. The reason I would say is that they're

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<v Speaker 1>likely to go to quantitative easing, but the way it's

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<v Speaker 1>set up in the UK, because of the bank's balance sheet,

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<v Speaker 1>they need to get permission from the Chancellor um and

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<v Speaker 1>so this is a delay. But it's a delay because

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<v Speaker 1>of a of a vote that wasn't expected, a government

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<v Speaker 1>that didn't plan for this vote, and markets obviously should

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<v Speaker 1>be mindful of that. I think it was a big

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<v Speaker 1>surprise is that they hadn't acted. And I think there's

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<v Speaker 1>many similarities and people will not like to hear this,

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<v Speaker 1>but there are many similarities in comparison with two thousand

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<v Speaker 1>and eight, where the data started to tank and it

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<v Speaker 1>took the MPC and it took the FIT a long

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<v Speaker 1>time to work out that the economy had actually moved

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<v Speaker 1>into recession. And many forecasters now in the UK are

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<v Speaker 1>actually saying credit suites, golden sacks, others are saying the

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<v Speaker 1>UK may quickly go into recession. So you think they

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<v Speaker 1>ought to act, but but there's this chaos going on

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<v Speaker 1>as the government's fallen, and of course there's boris, So

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<v Speaker 1>all right, well do you first of all, do you

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<v Speaker 1>do you concur with with the Bank of England's a

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<v Speaker 1>desire to stimulate the economy and that maybe there will

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<v Speaker 1>be a recession. I think the evidence certainly looks that way.

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<v Speaker 1>My my biggest concern is that is really the surveys

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<v Speaker 1>out in the last week or so, with a big

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<v Speaker 1>collapse in consumer and business confidence, businesses saying they are

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<v Speaker 1>going to delay investment projects, postponed recruitment. I mean, animal

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<v Speaker 1>spirits can move very quickly, and once they move, you've

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<v Speaker 1>really got to put a stop to them, because they

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<v Speaker 1>can really spiral downwards. So I would have said the

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<v Speaker 1>bankoeving this should be getting its retaliation in first and early,

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<v Speaker 1>but it has a history of basically delaying. I mean,

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<v Speaker 1>the arguments are we've got all this evidence, why don't

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<v Speaker 1>you do something, and they say we're going to delay.

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<v Speaker 1>And the thing you would argue would be, or what

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<v Speaker 1>evidence to the upside are you're going to see between

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<v Speaker 1>now and August? The like the likehood is you're going

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<v Speaker 1>to see more bad news and you probably should have

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<v Speaker 1>got in first. So I don't think that's a very

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<v Speaker 1>good idea, and I think markets will respond to that,

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<v Speaker 1>especially if we if we get bad data in the

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<v Speaker 1>next month or so much. I suspect we're going to

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<v Speaker 1>get well. There was a news item today that Burbery

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<v Speaker 1>is putting off a decision to expand its A weaving

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<v Speaker 1>facilities in the United Kingdom, delaying the implementation of about

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<v Speaker 1>a sixty five million dollar project. But they said that

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<v Speaker 1>delay might be quite short and as long as they

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<v Speaker 1>get a fixed on what Brexit will really mean for them,

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<v Speaker 1>do you think that that will all this business will

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<v Speaker 1>come back? Well, we will have to see him. I mean,

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<v Speaker 1>I think what we're what we realized is that the

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<v Speaker 1>government neither had a plan of what to do in

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<v Speaker 1>economic terms if there was a post Brexit vote, and

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<v Speaker 1>the Brexit is themselves have no plan about the form

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<v Speaker 1>in which organisms which discussions would take place with the

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<v Speaker 1>European Union. So really we don't know. Um. The new

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<v Speaker 1>chance and I think said yesterday instead of the two

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<v Speaker 1>years it would take to resolve the exit, it might

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<v Speaker 1>take six, Thank you very much. Danny blanche Flower, Professor

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<v Speaker 1>of Economics, Dartmouth College of Bloomberg Television contributing editor. This

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<v Speaker 1>is Bloomberg coming up on taking stock. Yes, we are

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<v Speaker 1>going to talk about Amazon and Amazon's Prime sales day

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<v Speaker 1>volume jump sixty sales when all tallied could reach a

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<v Speaker 1>billion dollars in a single day. That's next