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Speaker 1: Broadcasting live to New York Bloomberg eleventh yold to Washington

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Speaker 1: d C Bloomberg to Boston Bloomberg twelve hundreds, to San

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Speaker 1: Francisco Bloomberg nine sixty to the Country series XM Channel

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Speaker 1: one ninety and around the globe the Bloomberg Radio Plus

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Speaker 1: Appen Bloomberg dot com. This is Hoomwork Surveillance. Good morning,

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Speaker 1: I'm Karen Moscow along with Tom Keenan, Barry Ridholtz and

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Speaker 1: the Opening Vale Brought to you by s c I

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Speaker 1: imagine when investment operations predicularly respond to regulatory change. C

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Speaker 1: I S has global operating platform can be your canalysts

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Speaker 1: for business transformation at sc i C dot com. Slash

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Speaker 1: imagine Stocks higher at the open SNP five up four

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Speaker 1: tenths per cent or seven points at sixty two down

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Speaker 1: Jones Industrial average of three ten percent or sixty five

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Speaker 1: points to seventeen thousand, six nine eight Nasdacs up six

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Speaker 1: tenths per cent or twenty seven points to forty eight

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Speaker 1: seventy four ten year Treasury down nine thirty seconds. The

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Speaker 1: yield one eight three percent yield on the two year

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Speaker 1: point seven nine percent nine x Scrude oil up two

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Speaker 1: point seven per cent or a dollar six four a barrel.

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Speaker 1: Comics gold is down to ten percent or two dollars

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Speaker 1: ten cents tow the euro a dollar thirteen thirteen, the

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Speaker 1: ends one twelve point six six And that's a Bloomberg

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Speaker 1: business flash, Tom and Barry Turner, thanks so much. Richard

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Speaker 1: Turnell is with black Rock. He's got a fancy title,

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Speaker 1: Global Chief Investment Strategist out of Cambridge and with a

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Speaker 1: tour duty at the Bank of England, which means he

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Speaker 1: learned he was trained. He lunch is as bad as

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Speaker 1: lunch yesterday at the Economic Club of New York. The

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Speaker 1: Rubbert Chicken was off the chart and Mr Turner, the

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Speaker 1: conversation was not like the lunch. It was blinding to

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Speaker 1: hear chair yelling inner dovishness. Was she ripping out a

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Speaker 1: page from Governor Carney of central banks that are boxed in, Sorry,

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Speaker 1: Fir's little good morning. Look. I think what you're seeing

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Speaker 1: is definitely a change in tone coming out at the FED,

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Speaker 1: and that really following a change in tern we've seen

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Speaker 1: from not just Governor Carney, but actually I think across

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Speaker 1: the world d CB and the Bank Japan alll signaling

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Speaker 1: easier policy going forward. I think we're just an environment

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Speaker 1: where there's such uncertainty out there that the FED prepared

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Speaker 1: to tolerate the risk of higher inflation, at least in

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Speaker 1: the short run, given the potential risk of the down

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Speaker 1: side of the economy. So I think we're just gonna

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Speaker 1: be an environment now A policy is going to be

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Speaker 1: looser globally for some time that we all thought just

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Speaker 1: a few weeks ago. And then you brilliantly highlight your

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Speaker 1: note what everyone's noticed. Do we think Dean Cronin for

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Speaker 1: his view this morning, it's too quiet out there? T

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Speaker 1: o O quiet? How do we respond to the too quiet?

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Speaker 1: So it's too quite, particularly in equity markets, and you know,

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Speaker 1: the VIX has collapsed right back down below fourteen again

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Speaker 1: this morning. It's at a level we haven't seen since

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Speaker 1: last summer. Now, we still think that equity is the

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Speaker 1: right place to be for most clients, but volatility is

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Speaker 1: very unlikely to stay at these levels for a long

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Speaker 1: period of time, partly because it's just so unusually low,

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Speaker 1: and also you're not seen the same confirmation signals from

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Speaker 1: fixed income or currency where volatility is actually is actually

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Speaker 1: much higher. So our recommendation to clients would be you

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Speaker 1: should be taking advantage of these very low levels of

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Speaker 1: volatility to put some hedges in your port failure. Again,

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Speaker 1: we think, we think this is a good time to

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Speaker 1: be in risk assets, but there are definitely risks out there.

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Speaker 1: There are risks around China, risks around politics both in

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Speaker 1: the US and here in Europe, and increasingly is we

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Speaker 1: just touched on risks around inflation where the said is

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Speaker 1: prepared to lease tolerate higher inflation in the short run.

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Speaker 1: So now it's a good time to be taking advantage

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Speaker 1: of the very low levels evolved, very low levels of

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Speaker 1: VIX and and put a bit of insurance in your

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Speaker 1: port failio. Let me push back on the idea that

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Speaker 1: this is such an unusual situation. Didn't we have the

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Speaker 1: VIX in in the low team means for years and

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Speaker 1: years and years in the nineteen nineties, in a period

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Speaker 1: where markets clearly a different environment and than today. But

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Speaker 1: it's hard to say that we've never really experienced anything

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Speaker 1: like this, isn't it. Well, you've never seen before was

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Speaker 1: such a prolonged period of low vall. So so we

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Speaker 1: saw three consecutive years of of the VIX not just

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Speaker 1: in the low teens and the low low teens from

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Speaker 1: two thousand and twelve through the two thousand and fourteen.

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Speaker 1: But we've looked back at our data over all history,

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Speaker 1: and never in history have we seen a sustained period

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Speaker 1: of volatility in this low before. So you're right, there

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Speaker 1: have been certainly periods of low volatility in the past,

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Speaker 1: often associated with easier monetary policy, that we have never

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Speaker 1: seen a prolonged period of very low vall like the

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Speaker 1: one we saw through two thousand and twelve to two

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Speaker 1: thousand and fourteen. So yeah, I think it's it's very

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Speaker 1: dangerous assume that's the norm and that's what we're going

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Speaker 1: back to. Our analysis suggests that actually it was quantitative easy,

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Speaker 1: which would the grove volatility to those extraordinary low levels.

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Speaker 1: With the feed now having exited QEWE, I think it's

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Speaker 1: much more likely you're going to see these periodic spikes

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Speaker 1: involved going forward. And actually, you know what we've seen

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Speaker 1: in the last few months, I suspect it's going to

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Speaker 1: become a much more commonplace experience. We get these short

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Speaker 1: term writers involved, followed by eating back. So I think

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Speaker 1: I think it's been a very unusual environment. So let

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Speaker 1: me let me channel the message of the market and

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Speaker 1: and create the counter narrative, which is the fall in

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Speaker 1: volatility is saying, hey, the ft is right. There is

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Speaker 1: no real threat from inflation, at least not anytime soon.

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Speaker 1: And while everybody's all upset about the sturm and drunk

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Speaker 1: about the politics, even if Bernie Sanders or Donald Trump

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Speaker 1: takes the White House, what are they going to be

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Speaker 1: able to accomplish through through Congress? Can we read the

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Speaker 1: low valence saying hey, maybe things aren't as terrible as

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Speaker 1: everybody thinks. Yeah, I'd actually point to some other things

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Speaker 1: as well as those of driving that that volatility decline.

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Speaker 1: If you go back to January, people were very worried

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Speaker 1: about oil and what that meant for the economy. That

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Speaker 1: you know, those those concerns have dissipated. That they were

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Speaker 1: very worried about further China's de evaluation after moving the

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Speaker 1: currency early in January. Those those concerns have dissipated. And

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Speaker 1: there was even concerned about another European banking crisis, particularly

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Speaker 1: after the Deutsche Bank news. And again those those concerns

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Speaker 1: have dissipated because actually European banks are still able to

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Speaker 1: access credit, so You've had a lot of kind of

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Speaker 1: fancy things just not happening. I would say, so part

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Speaker 1: of the news is like a lot of concerns out

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Speaker 1: there which have just not played out, and that's alloy

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Speaker 1: of volatility to fall. But when I look forward, it's

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Speaker 1: not hard to come up with a list of potential

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Speaker 1: things to worry about. And again just go back to

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Speaker 1: how how unusual this level of volatility is. I think

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Speaker 1: is yeah, with that windfall is low, this is the

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Speaker 1: time to think about buying that potentior. Who's the horse

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Speaker 1: and who's a card? I'm going to say, vole in

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Speaker 1: the markets are out front of the economics, which just

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Speaker 1: damp and global GDP, which folds right into the revenue

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Speaker 1: stream of all the corporations we talked about in the

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Speaker 1: bottom line is the damp and vows getting out front

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Speaker 1: of a new terminal value for revenue growth. I mean,

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Speaker 1: what is your model for revenue growth? So we're thinking

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Speaker 1: a very low growth environment for some time, and actually

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Speaker 1: you know that that that low growth environment should be

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Speaker 1: one actually in which risk assets can do reasonably well.

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Speaker 1: When this sweet spot right now, where that takes us

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Speaker 1: back to what we saw something that in the nineties.

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Speaker 1: You talked about in the nineties earlier in terms of

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Speaker 1: low bow, in this sweet spot that it was called goldilocks,

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Speaker 1: where growth is looking sufficiently strong that people are less

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Speaker 1: worried about deflation. But it's not but it's not so

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Speaker 1: strong as to put the fedback in play, with the

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Speaker 1: Ellen's comments in the last few days reinforcing that. So

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Speaker 1: you're in this you're in this sweet spot that's helping

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Speaker 1: facilitate this low bowl. But there are real risks on

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Speaker 1: both sides. There's risks that you know that we have

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Speaker 1: an external shock which drives us into a week or

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Speaker 1: growth environment, and we can talk about some of the

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Speaker 1: risks particularly around you know, Europe and China devaluation. The

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Speaker 1: risk on the other side which actually start to see

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Speaker 1: inflation pick up, that that's a risk people really what

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Speaker 1: even considering just a few months ago, but actually some

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Speaker 1: of the day to think in the US is coming

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Speaker 1: coming through suggesting that. So again I think it's just

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Speaker 1: dangerous assume that ball just stayed at these levels for

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Speaker 1: a long time. Richard, Thank you so much. Richard Turner

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Speaker 1: with Black Rocket London, look forward to speaking to particularly

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Speaker 1: as we migrate over to London. Uh in the coming

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Speaker 1: weeks again. A Richard turn On, global chief investment strategist

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Speaker 1: black Rock, the market up a hundred two. I don't

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Speaker 1: know if I'm bar Barry. Where's the record now? Is

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Speaker 1: like eighteen thousand three years. We're still uoints away. We're

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Speaker 1: about four or three point seven percent away from all

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Speaker 1: time highs. Okay, so we're not on the high watch yet.

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Speaker 1: We're not on the record watch, but we're getting there

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Speaker 1: at some point. The VIX thirteen point six one, Richard

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Speaker 1: turn Ill talking about a VIX under fourteen is being

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Speaker 1: remarkable to yield two year yield points seven nine, maket

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Speaker 1: point eight zero percent in the tenure one point eight four.

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Speaker 1: There's a thirty year bond two point six four. These

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Speaker 1: are wow yields. After Janet Yellen speaks in this hour

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Speaker 1: of Bloomberg surveillance, roch By bonsa White Plains visit Mazda

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Speaker 1: White Plains dot com with our news Michael Barr, Tom Berry,

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Speaker 1: thank you very much. Brussels Mainly report will remain closed

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Speaker 1: today as temporary repair work continues. Last week of suicide

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Speaker 1: bomber destroyed the check in area. The temporary system when

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Speaker 1: it begins we'll be able to process eight hundred passengers

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Speaker 1: an hour. The normal is five thousand per hour. It

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Speaker 1: looks like a Republican pledge is falling apart. The three

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Speaker 1: Republican presidential candidates have pulled back on supporting whoever the

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Speaker 1: party chooses as its nominee. At a town hall meeting

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Speaker 1: last night, front runner Donald Trump said he's resending his

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Speaker 1: promise to support the nominee because he's been treated badly.

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Speaker 1: Ted Cruz says having a Trump nomination would be a

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Speaker 1: train wreck. Trump later spoke to ABC this morning, I'll

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Speaker 1: make a decision if if I don't get it, which

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Speaker 1: I think I will, And as far as his support

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Speaker 1: of me, I don't care if he supports me. John

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Speaker 1: Kasy says he wants to see how this all folds

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Speaker 1: out before the nomination. Mourners will pay their final respects today.

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Speaker 1: Jo extra Ronto mayor Rob Ford for It died last week.

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Speaker 1: from around the world, not Michael Barr, Barry, Tom and Michael,

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Speaker 1: thanks so much. Coming up, we're gonna consider the ultimate

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Speaker 1: all in one mass Era Matt Lipstick. I mean, I'm

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Speaker 1: all over that. I mean, you know you gotta look

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Speaker 1: for your your new Revlon Matt Bomb, Matt Bomb. I

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