1 00:00:03,320 --> 00:00:07,840 Speaker 1: This is Bloomberg surveillance. I think that the real genius 2 00:00:07,880 --> 00:00:11,720 Speaker 1: of capitalists is competition, and we are forgetting this. I 3 00:00:11,760 --> 00:00:13,680 Speaker 1: feel very lucky to be looking at the old market 4 00:00:13,760 --> 00:00:16,520 Speaker 1: so much right now, because we're really seeing a complete 5 00:00:16,520 --> 00:00:20,600 Speaker 1: game change. It's dichotomy between what's happening in financial markets 6 00:00:20,720 --> 00:00:23,919 Speaker 1: and the concern about what happening in the veilic On me, 7 00:00:23,960 --> 00:00:27,960 Speaker 1: it's extremely marked Bloomberg surveillance. You're linked to the world 8 00:00:27,960 --> 00:00:33,400 Speaker 1: of economics, finance, and investment on Bloomberg Radio. Good morning, 9 00:00:33,400 --> 00:00:36,000 Speaker 1: I Michael McKee. It is seven am on Wall Street. 10 00:00:36,200 --> 00:00:39,720 Speaker 1: At seven am on Constitution Avenue in Washington, connecting the 11 00:00:39,760 --> 00:00:43,280 Speaker 1: Fed and Congress. It's also seven am in New Hampshire, 12 00:00:43,320 --> 00:00:48,760 Speaker 1: connecting the presidential campaign too well to what issues we 13 00:00:48,840 --> 00:00:52,720 Speaker 1: will consider today on surveillance. You know by now Bernie 14 00:00:52,760 --> 00:00:56,600 Speaker 1: Sanders and Donald Trump one handily in New Hampshire, and 15 00:00:56,720 --> 00:00:58,760 Speaker 1: in about an hour and a half the House Financial 16 00:00:58,800 --> 00:01:04,039 Speaker 1: Services Committee release fetcher Janet Yellen's prepared testimony. At the moment, 17 00:01:04,080 --> 00:01:07,720 Speaker 1: neither piece of news seems to be worrying investors. European 18 00:01:07,840 --> 00:01:11,360 Speaker 1: stocks are higher, the stock six hundred by seven points 19 00:01:11,400 --> 00:01:13,720 Speaker 1: two and a quarter percent. The Docks is up a 20 00:01:13,760 --> 00:01:16,040 Speaker 1: hundred and ninety nine points to and a quarter percent. 21 00:01:16,360 --> 00:01:19,119 Speaker 1: The Footsie in London up sixty three points one point 22 00:01:19,200 --> 00:01:22,200 Speaker 1: one percent. Here in the US, SMP futures are up 23 00:01:22,280 --> 00:01:25,959 Speaker 1: nineteen points one percent. It's a one hundred thirty point 24 00:01:25,959 --> 00:01:28,520 Speaker 1: gain for the Dow eight tenths of a percent and 25 00:01:28,560 --> 00:01:31,199 Speaker 1: has like one. Mini futures are up fifty four points 26 00:01:31,319 --> 00:01:35,399 Speaker 1: right now one point four percent. The bond market is 27 00:01:35,560 --> 00:01:39,000 Speaker 1: falling as stocks gain. Yields are higher one point seven 28 00:01:39,040 --> 00:01:41,319 Speaker 1: five percent for your ten year yield one point one 29 00:01:41,400 --> 00:01:44,760 Speaker 1: seven four your five year, the two year going for 30 00:01:44,880 --> 00:01:49,040 Speaker 1: seventy one basis points. Right now. The dollar index is 31 00:01:49,200 --> 00:01:52,000 Speaker 1: little change down to day ninety six point one one one. 32 00:01:52,480 --> 00:01:58,200 Speaker 1: The dollar is stronger against the ENE six, against the 33 00:01:58,200 --> 00:02:02,280 Speaker 1: ear one fifty nine, and the against the pound. And 34 00:02:02,320 --> 00:02:05,200 Speaker 1: this is interesting today gold second day in a row 35 00:02:05,320 --> 00:02:13,200 Speaker 1: it's getting hammered one thousand cents one three So an 36 00:02:13,240 --> 00:02:18,200 Speaker 1: interesting changing tone for the markets today. Bob, since she's 37 00:02:18,240 --> 00:02:22,040 Speaker 1: a global strategist for Amherst Pierrepont and he's a longtime 38 00:02:22,080 --> 00:02:25,960 Speaker 1: member of the Bloomberg Surveillance hockey team, uh Bob joins 39 00:02:26,040 --> 00:02:28,600 Speaker 1: US now Janet Yell and Bob has A has to 40 00:02:28,639 --> 00:02:30,840 Speaker 1: deliver a message on Capitol Hill today, But I'm wondering 41 00:02:30,880 --> 00:02:34,280 Speaker 1: ahead of that, what message, if any, has Wall Street 42 00:02:34,360 --> 00:02:38,359 Speaker 1: been delivering to her ahead of it? Well, I don't 43 00:02:38,400 --> 00:02:43,160 Speaker 1: know if it's particularly UM delivered to UH, to the Fed, 44 00:02:43,240 --> 00:02:46,480 Speaker 1: although certainly they're one central bank that's been taking some 45 00:02:46,520 --> 00:02:49,680 Speaker 1: action recently. I just think it's a it's a general 46 00:02:49,720 --> 00:02:53,600 Speaker 1: concern that that central banks UM really don't have a 47 00:02:53,639 --> 00:02:56,519 Speaker 1: lot left that they can do UM. You know, we 48 00:02:56,600 --> 00:03:00,480 Speaker 1: had Muhammad Alarian on yesterday talking about how util banks 49 00:03:00,480 --> 00:03:03,760 Speaker 1: have been a great source of stability UM, but it's 50 00:03:03,760 --> 00:03:06,560 Speaker 1: not clear that the e c B, the Bank of 51 00:03:06,639 --> 00:03:10,840 Speaker 1: Japan UH really have much more UH they can do 52 00:03:11,040 --> 00:03:14,200 Speaker 1: to try to stimulate growth. And I think the new 53 00:03:14,240 --> 00:03:18,000 Speaker 1: one that that markets are concerned about is actually the PBOC, 54 00:03:18,200 --> 00:03:21,720 Speaker 1: the People's Back of China, which is trying to navigate 55 00:03:21,760 --> 00:03:26,760 Speaker 1: a very difficult path here between stabilizing the currency and 56 00:03:26,800 --> 00:03:29,720 Speaker 1: stimulating the economy. And that's a that's a very difficult 57 00:03:29,760 --> 00:03:34,960 Speaker 1: task to take on. What how does she talk about 58 00:03:35,040 --> 00:03:39,840 Speaker 1: that without creating more of the volatility that she is 59 00:03:39,880 --> 00:03:43,240 Speaker 1: that than talking about Yeah, that's a that's a pretty 60 00:03:43,240 --> 00:03:46,360 Speaker 1: tough task. And um, you know, I think the Fed 61 00:03:47,240 --> 00:03:55,120 Speaker 1: the Fed's mandate. Um, Uh, stable inflation and maximum employment growth. Um. Uh, 62 00:03:55,320 --> 00:03:58,880 Speaker 1: they're doing pretty well. Uh. Inflation is you know, certainly 63 00:03:58,960 --> 00:04:00,920 Speaker 1: core inflation in the u US is picking up to 64 00:04:01,040 --> 00:04:03,440 Speaker 1: that one and a half to two percent range. The 65 00:04:03,480 --> 00:04:06,960 Speaker 1: employment numbers look terrific. Um. So how do they stay 66 00:04:07,000 --> 00:04:09,600 Speaker 1: true to their mandate, particularly in the House where they 67 00:04:09,640 --> 00:04:13,440 Speaker 1: can be pretty unforgiving on international events? Um? How does 68 00:04:13,480 --> 00:04:17,040 Speaker 1: she stick to the to that mandate but yet express 69 00:04:17,120 --> 00:04:19,800 Speaker 1: some concern about the volatility and markets. It's gonna be 70 00:04:19,839 --> 00:04:22,760 Speaker 1: a tough testimony. Bloomber Savellance this morning, we say good 71 00:04:22,760 --> 00:04:24,840 Speaker 1: morning to all of you. Michael mckeat and Tom Keene. 72 00:04:24,839 --> 00:04:28,159 Speaker 1: Looking forward to cherry yelling and uh really starts strong 73 00:04:28,240 --> 00:04:32,160 Speaker 1: this hour with Robert Sinch. Bloomberg Surveillance this morning brought 74 00:04:32,200 --> 00:04:35,520 Speaker 1: you buy Investco. Investing isn't about meeting benchmarks, It's about 75 00:04:35,520 --> 00:04:39,680 Speaker 1: achieving goals. Find out how invest goes. High conviction approach 76 00:04:40,440 --> 00:04:45,000 Speaker 1: can help. Visit investco dot com slash high conviction. I 77 00:04:45,320 --> 00:04:49,919 Speaker 1: n v s c O investco dot com slash high conviction. 78 00:04:50,080 --> 00:04:52,960 Speaker 1: All week, I'm and saying Getsinch, Getsinch, Get Sinch Bob, 79 00:04:53,160 --> 00:04:56,960 Speaker 1: I want to bring the moment over to the conflation 80 00:04:57,080 --> 00:05:01,400 Speaker 1: I see in the media between gross macroeconomics like the 81 00:05:01,440 --> 00:05:05,880 Speaker 1: price of oil GDP, global slowdown, shortage of haggard demand 82 00:05:06,360 --> 00:05:11,360 Speaker 1: over to finance and liquidity issues within banks. You are 83 00:05:11,440 --> 00:05:15,880 Speaker 1: a grizzled veteran. You are the Yeremi Yagur of looking 84 00:05:16,040 --> 00:05:21,760 Speaker 1: at financial economics. How close are we to liquidity lacks 85 00:05:21,800 --> 00:05:26,360 Speaker 1: of confidence in our international system? You know, it's it's 86 00:05:26,440 --> 00:05:29,360 Speaker 1: it's funny you mentioned just looking at a series this morning, 87 00:05:30,000 --> 00:05:32,840 Speaker 1: looking at the swap rate in in the Eurozone, say 88 00:05:32,880 --> 00:05:35,120 Speaker 1: the two year swap rate, which is a generic borrowing 89 00:05:35,200 --> 00:05:39,880 Speaker 1: rate of used between banks, and the two year German Bund, 90 00:05:39,960 --> 00:05:43,440 Speaker 1: which is which is kind of the pristine uh example 91 00:05:43,480 --> 00:05:47,120 Speaker 1: of borrowing crops costs in Europe. Um. That spread has 92 00:05:47,160 --> 00:05:49,599 Speaker 1: widened out in the last couple of days from about 93 00:05:49,720 --> 00:05:53,160 Speaker 1: thirty to thirty five basis points. Now that's a meaningful 94 00:05:53,200 --> 00:05:57,240 Speaker 1: little move. But actually over the last three plus years, 95 00:05:57,279 --> 00:06:00,800 Speaker 1: since the beginning of two thousands thirteen, that's average thirty 96 00:06:00,800 --> 00:06:03,880 Speaker 1: three basis points. So we're right there on average. If 97 00:06:03,880 --> 00:06:07,120 Speaker 1: you go back to early two thousand and twelve, prior 98 00:06:07,200 --> 00:06:10,880 Speaker 1: to Mario drags pledge to do whatever it takes. That 99 00:06:11,000 --> 00:06:14,920 Speaker 1: was running over a hundred basis points. So is there 100 00:06:14,960 --> 00:06:17,279 Speaker 1: a little sign of concern in the in the banking 101 00:06:17,320 --> 00:06:20,719 Speaker 1: system in in the Eurozone, Yes, but it's still very 102 00:06:20,880 --> 00:06:24,400 Speaker 1: very contained relatives what we've seen in the past um 103 00:06:24,640 --> 00:06:27,880 Speaker 1: and and not seeing great levels of distress in the 104 00:06:28,440 --> 00:06:31,160 Speaker 1: in the financing side in the US banking system either. 105 00:06:31,200 --> 00:06:34,560 Speaker 1: So I think right now, um, most of the pressure 106 00:06:34,600 --> 00:06:38,799 Speaker 1: is showing up in asset prices um for bank stocks 107 00:06:38,839 --> 00:06:42,840 Speaker 1: as opposed to real liquidity problems. And and that's important 108 00:06:42,880 --> 00:06:46,360 Speaker 1: because the central banks can deal with liquidity problems and 109 00:06:46,400 --> 00:06:50,000 Speaker 1: they know how to address those issues. That's not what's 110 00:06:50,040 --> 00:06:52,880 Speaker 1: happening right now, and so it's not clear what they 111 00:06:52,880 --> 00:06:56,080 Speaker 1: can do to alleviate what the market's concerns are at 112 00:06:56,080 --> 00:06:58,599 Speaker 1: this moment. And the market this is great, this is 113 00:06:58,600 --> 00:07:01,919 Speaker 1: the conflation and Dominique Constant at Deutsche Bank has written 114 00:07:01,920 --> 00:07:04,560 Speaker 1: about that. Dr Hilaria and yesterday talked about this front 115 00:07:04,560 --> 00:07:08,440 Speaker 1: and center. If it's a balance sheet right down issue, oil, 116 00:07:08,680 --> 00:07:12,880 Speaker 1: high yield, China, whatever it's gonna be, is that contained 117 00:07:13,240 --> 00:07:20,080 Speaker 1: individual institutions or is it systemic? And I think that's 118 00:07:20,080 --> 00:07:22,200 Speaker 1: the key issue when you look at at things like 119 00:07:22,280 --> 00:07:25,800 Speaker 1: swap spreads, When you start to get the whole banking 120 00:07:25,840 --> 00:07:30,680 Speaker 1: sector having to pay up meaningfully for liquidity, then it 121 00:07:30,720 --> 00:07:36,000 Speaker 1: becomes more systemic. Um, right now, that's not really happening 122 00:07:36,000 --> 00:07:38,840 Speaker 1: in a major way, even in the Eurozone banking sector. 123 00:07:38,920 --> 00:07:41,920 Speaker 1: So I think for now, um it is more of 124 00:07:41,960 --> 00:07:46,239 Speaker 1: a uh an individual company by company issue of right downs, 125 00:07:46,280 --> 00:07:51,000 Speaker 1: capital adequacy, etcetera, not yet getting into the broader liquidity 126 00:07:51,120 --> 00:07:54,360 Speaker 1: environment at which the central whether central banks can really 127 00:07:54,400 --> 00:07:58,080 Speaker 1: take action. It seems like what you're saying is basically 128 00:07:58,120 --> 00:08:01,560 Speaker 1: the problem seems to be ignorance on the part of 129 00:08:01,600 --> 00:08:04,760 Speaker 1: investors who maybe aren't doing as deep a dive as 130 00:08:04,800 --> 00:08:07,680 Speaker 1: you are into this, who are just looking at UH, 131 00:08:08,080 --> 00:08:10,480 Speaker 1: you know, sat Deutsche banks issues and saying it's two 132 00:08:10,480 --> 00:08:14,080 Speaker 1: thousand eight all over again. Well, yes, and no, I 133 00:08:14,120 --> 00:08:17,480 Speaker 1: mean I think individual institutions, I wouldn't you know. I 134 00:08:17,480 --> 00:08:20,960 Speaker 1: don't have a view on the valuation of individual institutions, 135 00:08:21,000 --> 00:08:23,400 Speaker 1: and there are a lot of of analysts who do 136 00:08:23,400 --> 00:08:26,520 Speaker 1: a deep dive into those and I'll leave that to them. 137 00:08:26,600 --> 00:08:31,200 Speaker 1: But I think that that the concerns that what might 138 00:08:31,240 --> 00:08:34,800 Speaker 1: be happening at certain institutions is spilling over into the 139 00:08:34,880 --> 00:08:39,040 Speaker 1: broader markets. UM doesn't look as though it is happening yet, 140 00:08:39,040 --> 00:08:42,600 Speaker 1: and I think that's important UM, to keep a focus on. 141 00:08:42,679 --> 00:08:45,360 Speaker 1: It's It's not to say that there aren't other problems 142 00:08:45,440 --> 00:08:47,880 Speaker 1: going on in the world, grow slow downs, et cetera. 143 00:08:48,440 --> 00:08:51,680 Speaker 1: But in terms of the financing activity that yet it's 144 00:08:51,720 --> 00:08:55,599 Speaker 1: not been broadly impacted by what's going on. When I 145 00:08:55,679 --> 00:08:57,960 Speaker 1: look bob it doll again and we'll talk about this 146 00:08:58,040 --> 00:09:01,320 Speaker 1: in our next Black morphn exchange, is it is it 147 00:09:01,840 --> 00:09:06,080 Speaker 1: the markets pricing in further negative yields in Japan or 148 00:09:06,120 --> 00:09:08,480 Speaker 1: is there more going on at that When we see 149 00:09:08,520 --> 00:09:13,160 Speaker 1: young strength, you know, I think we're we're back a 150 00:09:13,160 --> 00:09:15,640 Speaker 1: little bit to the to the old days of risk 151 00:09:15,679 --> 00:09:19,800 Speaker 1: aversion Jan Swiss franc Um. One thing that's really developed 152 00:09:19,840 --> 00:09:22,440 Speaker 1: over the last twelve or eighteen months is japan Is 153 00:09:22,640 --> 00:09:26,480 Speaker 1: has soared back to a pretty large current accounts surplus. 154 00:09:26,920 --> 00:09:30,000 Speaker 1: Remember they lost that surplus after the earthquakes innami in 155 00:09:30,040 --> 00:09:33,199 Speaker 1: two thousand and eleven when they shut down all their 156 00:09:33,280 --> 00:09:35,600 Speaker 1: nuclear plans. They had to import a lot of oil 157 00:09:35,640 --> 00:09:39,599 Speaker 1: to produce electricity, and they lost their current account surplus. 158 00:09:39,640 --> 00:09:43,280 Speaker 1: And UM we've seen that build back up a combination 159 00:09:43,400 --> 00:09:46,240 Speaker 1: of of getting some of the nuclear plants back on, 160 00:09:46,360 --> 00:09:49,360 Speaker 1: but also lower oil prices. Now why is that important. 161 00:09:49,360 --> 00:09:51,800 Speaker 1: It means that Japan is running a surplus with the 162 00:09:51,800 --> 00:09:54,760 Speaker 1: rest of the world every month. They need to recycle 163 00:09:54,840 --> 00:09:59,680 Speaker 1: that surplus. And if there's not capital outflow into foreign markets, 164 00:10:00,520 --> 00:10:03,000 Speaker 1: the pressure is there to push the entire and I 165 00:10:03,000 --> 00:10:05,120 Speaker 1: think that's exactly what we've seen in the last couple 166 00:10:05,120 --> 00:10:07,640 Speaker 1: of weeks. A theme to continue with Robertson's thrilled to 167 00:10:07,679 --> 00:10:09,920 Speaker 1: have him on today. Of course, with his UH work 168 00:10:09,920 --> 00:10:11,960 Speaker 1: at bear Sterns and Make of America over there he 169 00:10:12,040 --> 00:10:15,280 Speaker 1: is with Amherst PUERPND futures up twenty down, futures up 170 00:10:15,280 --> 00:10:19,440 Speaker 1: one thirty two. The yield hires. Mike mcketh mentioned risk 171 00:10:19,559 --> 00:10:22,320 Speaker 1: on really across the board one point seven six percent 172 00:10:22,800 --> 00:10:26,600 Speaker 1: on the yield. Importantly, we have curve steepening this morning. 173 00:10:26,600 --> 00:10:29,960 Speaker 1: It's ever so slight, but frankly, after the last two days, 174 00:10:30,000 --> 00:10:33,160 Speaker 1: will take it. The two stents spread a hundred and 175 00:10:33,240 --> 00:10:36,320 Speaker 1: four basis points. We made a real bout for nine 176 00:10:36,320 --> 00:10:40,040 Speaker 1: basis points. We didn't get there. West Texas fifty two, 177 00:10:40,080 --> 00:10:43,600 Speaker 1: Brent thirty point nine one up about fifty five cents 178 00:10:43,640 --> 00:10:47,560 Speaker 1: each dollar. Yain was one fourteen now a one fifteen 179 00:10:48,160 --> 00:10:54,280 Speaker 1: point zero one seven Tanna all straight time to bring 180 00:10:54,280 --> 00:10:56,720 Speaker 1: in Michael r with the latest world of national headliness, 181 00:10:56,760 --> 00:10:59,360 Speaker 1: Mike Tom thank you very much. Republican Donald Trump and 182 00:10:59,480 --> 00:11:02,760 Speaker 1: a Democrats Bernie Sanders had sound wins last night in 183 00:11:02,800 --> 00:11:06,520 Speaker 1: the New Hampshire primaries. Most of the Republican presidential candidates 184 00:11:06,520 --> 00:11:10,880 Speaker 1: are heading to South Carolina for its Republican primary February twentieth, 185 00:11:10,960 --> 00:11:13,839 Speaker 1: but Chris Christie said last night he's heading back to 186 00:11:13,920 --> 00:11:17,880 Speaker 1: New Jersey to take a deep breath and reevaluate his campaign. 187 00:11:18,240 --> 00:11:21,520 Speaker 1: The man convicted of assassinating Senator Robert Kennedy in nineteen 188 00:11:21,600 --> 00:11:24,840 Speaker 1: sixty eight goes before a California parole board today for 189 00:11:24,920 --> 00:11:28,640 Speaker 1: a fifteenth time. Shuns Here Hunt, now seventy one, is 190 00:11:28,679 --> 00:11:32,400 Speaker 1: serving life in prison for Kennedy shooting. And Iranian drone 191 00:11:32,440 --> 00:11:35,720 Speaker 1: that flew over a US aircraft carrier last month was 192 00:11:35,800 --> 00:11:38,319 Speaker 1: the first to conduct an over flight of a US 193 00:11:38,400 --> 00:11:42,240 Speaker 1: carrier since as according to a Navy report obtained by 194 00:11:42,280 --> 00:11:45,760 Speaker 1: the Associated Repress. The drone flyover is the latest chapter 195 00:11:45,800 --> 00:11:48,520 Speaker 1: in the tense Persian Gulf naval encounter between Iran and 196 00:11:48,559 --> 00:11:51,760 Speaker 1: the US Global News twenty four hours a day, powered 197 00:11:51,800 --> 00:11:54,960 Speaker 1: by our two d journalists and more than a hundred 198 00:11:55,000 --> 00:11:57,640 Speaker 1: fifty news bureaus from around the world. I'm Michael Barr. 199 00:11:57,720 --> 00:12:01,360 Speaker 1: Like town, Michael, thanks so much. Must listen on economics, finance, investment, 200 00:12:01,400 --> 00:12:07,160 Speaker 1: Bloomberg Surveillance. Bloomberg Surveillance is brought to by New York 201 00:12:07,160 --> 00:12:09,160 Speaker 1: Community Bank in New York Commercial Bank, the nyc V 202 00:12:09,240 --> 00:12:11,240 Speaker 1: Family of Banks Bank with confidence. Anywhere you see the 203 00:12:11,360 --> 00:12:14,240 Speaker 1: NYCB logo throughout the New York Metro, Visit NYCB family 204 00:12:14,320 --> 00:12:24,920 Speaker 1: dot com. Global business news twenty four hours a day 205 00:12:25,120 --> 00:12:28,040 Speaker 1: at Bloomberg dot com, the Radio plus mobile lapp and 206 00:12:28,200 --> 00:12:32,200 Speaker 1: on your radio. This is a Bloomberg Business Flash. And 207 00:12:32,240 --> 00:12:34,800 Speaker 1: I'm Karin Moscow. This updates brought to you by National 208 00:12:34,880 --> 00:12:38,080 Speaker 1: Realty Returns on cash and rented real estate via them 209 00:12:38,120 --> 00:12:41,840 Speaker 1: at n r I, a dot net time warner posting 210 00:12:41,840 --> 00:12:44,840 Speaker 1: fourth quarter earnings that VIT analysts estimates as sales increased 211 00:12:44,840 --> 00:12:48,600 Speaker 1: in HBO and Turner and US DOT index futures are rising, 212 00:12:48,640 --> 00:12:51,719 Speaker 1: mirroring gains in European shares and oil prices. S and 213 00:12:51,800 --> 00:12:54,480 Speaker 1: p E mini futures have twenty points now e Many 214 00:12:54,520 --> 00:12:57,000 Speaker 1: futures have a hundred thirty two NASA DOCU. Many futures 215 00:12:57,000 --> 00:12:59,680 Speaker 1: of fifties seven decks in Germany's up two point four 216 00:12:59,679 --> 00:13:02,079 Speaker 1: person on ten, Your treasury down eight thirty seconds, the 217 00:13:02,160 --> 00:13:05,400 Speaker 1: yield one point seven five. Nimex screwed oil up two 218 00:13:05,400 --> 00:13:07,720 Speaker 1: point two percent or sixty cents at twenty eight dollars 219 00:13:07,800 --> 00:13:10,280 Speaker 1: fifty three cents of barrel Go mex Goal down one 220 00:13:10,280 --> 00:13:13,679 Speaker 1: point three percent or fifteen dollars ninety cents to two 221 00:13:13,760 --> 00:13:16,400 Speaker 1: seventy announced the euro a dollar twelve fifty four the 222 00:13:16,520 --> 00:13:20,040 Speaker 1: end one fourteen point nine eight. That's a bloomberg business flash. 223 00:13:20,080 --> 00:13:22,920 Speaker 1: Tom and Mike Karen, thanks so much. Michael McKain, Tim 224 00:13:23,000 --> 00:13:26,280 Speaker 1: Keen worldwide with Robert Sinch of Amer's pier Point. Rob 225 00:13:26,360 --> 00:13:29,520 Speaker 1: you and Robert You and I were um doing telepathy 226 00:13:29,600 --> 00:13:32,880 Speaker 1: this morning. I was working up a French industrial production 227 00:13:33,000 --> 00:13:36,680 Speaker 1: chart back at a zillion years. I took a four 228 00:13:36,760 --> 00:13:41,800 Speaker 1: year presidential moving average of French industrial production. A. It's 229 00:13:41,960 --> 00:13:46,840 Speaker 1: ugly and it has sustained ugly really through oh eight 230 00:13:46,920 --> 00:13:50,240 Speaker 1: oh nine and onward. What is the issue is that 231 00:13:50,360 --> 00:13:54,800 Speaker 1: the length of quiet of industrial production across nations? Or 232 00:13:54,840 --> 00:14:00,360 Speaker 1: is it this immediate moment of decline in industrial production. Well, 233 00:14:00,400 --> 00:14:03,400 Speaker 1: I think across Europe there's a there's a long term trend, 234 00:14:03,760 --> 00:14:07,679 Speaker 1: but I think that more immediately. Um. You know, one 235 00:14:07,679 --> 00:14:10,920 Speaker 1: of the concerns expressed for markets is a lack of 236 00:14:10,960 --> 00:14:14,240 Speaker 1: global growth, and it really is showing up now in 237 00:14:14,240 --> 00:14:17,439 Speaker 1: in output now. UM. You know this could be an 238 00:14:17,440 --> 00:14:20,920 Speaker 1: inventory adjustment, although it's been going on for for for 239 00:14:20,960 --> 00:14:23,560 Speaker 1: a bit of time now. But you look at industrial 240 00:14:23,600 --> 00:14:26,400 Speaker 1: production in Germany, it was down two percent year over 241 00:14:26,520 --> 00:14:29,560 Speaker 1: year in UH in December. You look at the production 242 00:14:29,600 --> 00:14:33,320 Speaker 1: in the UK down point four in the US down 243 00:14:33,360 --> 00:14:36,960 Speaker 1: one point seven five. So I've had a lot of 244 00:14:36,960 --> 00:14:43,680 Speaker 1: the biggest countries UM showing negative year over year output growth. Um. 245 00:14:44,080 --> 00:14:48,600 Speaker 1: That's a pretty significant development and certainly suggests a slowing 246 00:14:48,840 --> 00:14:51,400 Speaker 1: in global output. Now. A lot of that's being made 247 00:14:51,480 --> 00:14:55,720 Speaker 1: up for by increasing consumption of services, but that only 248 00:14:55,720 --> 00:14:59,400 Speaker 1: goes so far. And UH, we're definitely seeing this output 249 00:14:59,760 --> 00:15:02,160 Speaker 1: down on turn in the latter part of two thousand 250 00:15:02,120 --> 00:15:06,119 Speaker 1: and fifteen. And the question is is that an inventory 251 00:15:06,160 --> 00:15:08,320 Speaker 1: correction that can turn around as we go through the 252 00:15:08,360 --> 00:15:11,120 Speaker 1: first half of this year. Well, there's no question there's 253 00:15:11,160 --> 00:15:15,120 Speaker 1: a global slowing. The question is really whether we have 254 00:15:15,240 --> 00:15:21,960 Speaker 1: reached a tipping point where that slowdown becomes contraction. Well 255 00:15:22,000 --> 00:15:25,000 Speaker 1: in production, it looks like that's taken place. I mean 256 00:15:25,080 --> 00:15:28,360 Speaker 1: to get negative year over year growth rates in you know, 257 00:15:28,440 --> 00:15:31,560 Speaker 1: the U K. And France and Germany, and the US 258 00:15:32,600 --> 00:15:36,960 Speaker 1: industrial production growth in China down six percent or slightly below. 259 00:15:37,480 --> 00:15:40,400 Speaker 1: You know, we've definitely seen weakness. Um. You know. I 260 00:15:40,440 --> 00:15:44,920 Speaker 1: think the issue um is whether this persists and spreads 261 00:15:44,960 --> 00:15:49,760 Speaker 1: to employment and therefore service consumption, or whether in fact 262 00:15:49,840 --> 00:15:53,920 Speaker 1: this is is a large inventory correction around the world and 263 00:15:53,960 --> 00:15:56,520 Speaker 1: we'll see that ending and a pick up in the 264 00:15:56,640 --> 00:15:59,040 Speaker 1: in the early part of this year. I think it's 265 00:15:59,160 --> 00:16:04,080 Speaker 1: probably related to inventories and we could see some pickup UM. 266 00:16:04,120 --> 00:16:06,800 Speaker 1: But certainly, uh, you know, we're we're not seeing the 267 00:16:06,840 --> 00:16:10,360 Speaker 1: industrial sectors around the world doing much at all. One 268 00:16:10,400 --> 00:16:13,720 Speaker 1: of the positive themes, and I believe Dominic constant read 269 00:16:13,720 --> 00:16:17,400 Speaker 1: again us in folks, Dominic will join us Friday, thrilled 270 00:16:17,400 --> 00:16:20,560 Speaker 1: to have them on. Is the new and nascent debate 271 00:16:20,840 --> 00:16:23,400 Speaker 1: about what to do about the dollar. If the dollars 272 00:16:23,440 --> 00:16:26,560 Speaker 1: the global litmus paper, we all agree it's had a 273 00:16:26,560 --> 00:16:30,880 Speaker 1: heck of a run. Congenet yelling surprise markets today and 274 00:16:30,920 --> 00:16:36,320 Speaker 1: start talking about dollar stability if not a forced dollar depreciation, 275 00:16:38,120 --> 00:16:40,440 Speaker 1: well I would be one surprise guy. But he if 276 00:16:40,480 --> 00:16:45,920 Speaker 1: she does. Um, you know, traditionally the Treasury UH is 277 00:16:45,960 --> 00:16:49,400 Speaker 1: the spokesperson for the dollar. UM. I don't think cherry 278 00:16:49,440 --> 00:16:53,080 Speaker 1: Yelling would would really go after that topic. I think 279 00:16:53,080 --> 00:16:59,000 Speaker 1: all this talk of applaza chord really a bit overdone. Um. 280 00:16:59,040 --> 00:17:02,000 Speaker 1: You know, in the long term context, the dollar has recovered, 281 00:17:02,040 --> 00:17:05,199 Speaker 1: but certainly not anywhere near the unprecedented levels that we 282 00:17:05,359 --> 00:17:10,399 Speaker 1: lived through in the early early and you and me 283 00:17:10,520 --> 00:17:15,679 Speaker 1: not Michael, Yeah, really I wish, but I think that 284 00:17:15,680 --> 00:17:18,439 Speaker 1: that you know, it would be unlikely for the for 285 00:17:18,480 --> 00:17:22,280 Speaker 1: the chair to go directly after a market like like 286 00:17:22,320 --> 00:17:25,760 Speaker 1: the currency market. Well sure, but what what about Bob 287 00:17:25,800 --> 00:17:30,280 Speaker 1: Sinch and other currency market observers. Is the dollars rise 288 00:17:30,480 --> 00:17:33,840 Speaker 1: that the FED has been so concerned about is it 289 00:17:34,000 --> 00:17:37,800 Speaker 1: over We have seen the dollar decline in the last 290 00:17:37,880 --> 00:17:42,119 Speaker 1: couple of weeks. Well, you know, I think that you know, 291 00:17:42,160 --> 00:17:46,119 Speaker 1: the expected interest rate differentials probably did peek out in 292 00:17:46,160 --> 00:17:49,359 Speaker 1: the latter part of last year. UM, looks like the 293 00:17:49,400 --> 00:17:52,280 Speaker 1: FED will be a bit less aggressive than they had 294 00:17:52,320 --> 00:17:55,680 Speaker 1: previously indicated or or certainly the markets are thinking that 295 00:17:55,720 --> 00:17:58,000 Speaker 1: they think they may not do anything this year. So 296 00:17:58,560 --> 00:18:00,040 Speaker 1: I think we probably did get a bit of and 297 00:18:00,160 --> 00:18:04,280 Speaker 1: overshooting the dollar. The sentiment and the enthusiasm and positioning 298 00:18:04,359 --> 00:18:07,359 Speaker 1: in favor of the dollar certainly got extremes. So I 299 00:18:07,440 --> 00:18:10,719 Speaker 1: think we've had a bit of a healthy correction, and uh, 300 00:18:11,000 --> 00:18:13,240 Speaker 1: you know, I don't think the dollar becomes that big 301 00:18:13,240 --> 00:18:16,960 Speaker 1: an issue incrementally from here going forward. Okay, but before 302 00:18:16,960 --> 00:18:18,960 Speaker 1: we let you go, I gotta make some money this morning. 303 00:18:19,359 --> 00:18:22,640 Speaker 1: When does Bob Sinch reverse your feel on strong end 304 00:18:23,200 --> 00:18:25,800 Speaker 1: and go weaker short yen? When do you do that? 305 00:18:26,800 --> 00:18:29,680 Speaker 1: How do you do that? You know? I think that 306 00:18:29,680 --> 00:18:31,919 Speaker 1: that we've probably had most of the move in the 307 00:18:32,040 --> 00:18:34,080 Speaker 1: end that we're going to get um. And I think 308 00:18:34,119 --> 00:18:37,360 Speaker 1: one fifteen is a very important level for the Japanese authority. 309 00:18:37,520 --> 00:18:40,520 Speaker 1: So uh, certainly, you know, if if I was lo 310 00:18:40,600 --> 00:18:43,040 Speaker 1: on the end here, what I take profits just under 311 00:18:43,040 --> 00:18:48,360 Speaker 1: one fifteen? Absolutely, um. But to really drive dollar yen higher, um, 312 00:18:48,800 --> 00:18:51,560 Speaker 1: I think it's going to take a big sentiment change 313 00:18:52,080 --> 00:18:55,159 Speaker 1: about the U S economy and FED policy. So you know, 314 00:18:55,240 --> 00:18:57,440 Speaker 1: sometimes the best way to win is not to play. 315 00:18:57,480 --> 00:18:59,080 Speaker 1: And I think dollar yen is a tough one to 316 00:18:59,080 --> 00:19:01,520 Speaker 1: play in these days, Bob. Thank you so much, Bob. 317 00:19:01,520 --> 00:19:05,440 Speaker 1: Since with Amir's Pierpont giving us wisdom really cross asset 318 00:19:05,480 --> 00:19:08,760 Speaker 1: which we like to do best, equities, bounds, currencies and 319 00:19:09,600 --> 00:19:14,239 Speaker 1: Michael Janet yelling today, Um, you first, do no harm. 320 00:19:14,400 --> 00:19:18,840 Speaker 1: I mean, I assume none of the politicians will testimony. Yeah, 321 00:19:18,920 --> 00:19:21,239 Speaker 1: I I assume none of the politicians will ask her 322 00:19:21,680 --> 00:19:25,400 Speaker 1: about liquidity, Coco's, you know the rest of it. I mean, 323 00:19:25,440 --> 00:19:29,960 Speaker 1: that's not going to come up about somebody smart. Maybe 324 00:19:30,119 --> 00:19:35,040 Speaker 1: maybe they would, but as I say, as the predicate says, um, 325 00:19:35,040 --> 00:19:37,960 Speaker 1: not like that to happen, not likely to happen. We'll 326 00:19:37,960 --> 00:19:40,960 Speaker 1: have that coverage for you. Janet yelling, Chair of the 327 00:19:41,000 --> 00:19:43,840 Speaker 1: Federal Reserve System, an important testimony in Q and A. 328 00:19:44,480 --> 00:19:48,040 Speaker 1: It's a house, Mike's house financial so it's always more 329 00:19:48,160 --> 00:19:54,840 Speaker 1: entertaining than the boring senators. You know, I'm not going there. 330 00:19:55,480 --> 00:20:00,159 Speaker 1: I didn't say that. SMP up nineteen dal futures up 331 00:20:00,680 --> 00:20:07,160 Speaker 1: for Tucker's in the surveillance time out share good morning. Well, 332 00:20:07,160 --> 00:20:10,040 Speaker 1: we asked Bob, since is the dollars run over? Mark 333 00:20:10,119 --> 00:20:13,160 Speaker 1: Chandler studies currencies for Brown Brothers harm and will ask 334 00:20:13,240 --> 00:20:16,440 Speaker 1: him coming up, he says Janet Yellen, She who must 335 00:20:16,440 --> 00:20:26,360 Speaker 1: be listened to broadcasting live to New York, Gloomberg eleventh 336 00:20:26,960 --> 00:20:31,359 Speaker 1: to Washington, d C, Bloomberg to Boston, Bloomberg twelve on 337 00:20:31,760 --> 00:20:36,640 Speaker 1: to San Francisco, Bloomberg to the country Siesta Channel one 338 00:20:36,720 --> 00:20:40,240 Speaker 1: ninety and around the globe. The Bloomberg Radio Plus happened. 339 00:20:40,280 --> 00:20:45,199 Speaker 1: Bloomberg dot Com. This is Bloomberg Surveillance. Good morning at 340 00:20:45,280 --> 00:20:47,760 Speaker 1: seven thirty on Wall Street and Michael McKee along with 341 00:20:47,880 --> 00:20:50,680 Speaker 1: Tom Keene. We are an hour away from Janet Yellen's 342 00:20:50,720 --> 00:20:54,199 Speaker 1: testimony being released and two hours away from the start 343 00:20:54,320 --> 00:20:58,080 Speaker 1: of trading. Before you start thinking about what Miss Yellen 344 00:20:58,160 --> 00:21:00,440 Speaker 1: has to say, there is some corporate news out there. 345 00:21:00,520 --> 00:21:04,800 Speaker 1: Time Warner posting fourth quarter earnings that beat estimates profit 346 00:21:04,880 --> 00:21:08,080 Speaker 1: excluding some items a dollar six a share. Analysts have 347 00:21:08,160 --> 00:21:12,040 Speaker 1: predicted a dollar revenue decreased, though six percent to seven 348 00:21:12,040 --> 00:21:14,280 Speaker 1: point one billion, that trails the seven and a half 349 00:21:14,320 --> 00:21:18,640 Speaker 1: billion consensus estimate. Joint bank shares are up this morning 350 00:21:18,680 --> 00:21:21,560 Speaker 1: about nine percent. Germany's biggest bank considering buying back some 351 00:21:21,640 --> 00:21:24,800 Speaker 1: of its bonds, concerns it will struggle to make payments 352 00:21:24,800 --> 00:21:28,080 Speaker 1: on its risky as debt. Head pushed shares down. Disney 353 00:21:28,080 --> 00:21:30,919 Speaker 1: shares down two percent. Shareholders overlooking a record quarter for 354 00:21:30,920 --> 00:21:36,360 Speaker 1: sales and earnings, focused on flagging profits at ESPNS Sports Network, 355 00:21:36,880 --> 00:21:39,840 Speaker 1: and of course investors are taking in hand the news 356 00:21:39,920 --> 00:21:42,520 Speaker 1: from New Hampshire last night. Time now to check in 357 00:21:42,520 --> 00:21:46,000 Speaker 1: with Michael Barr and get the latest headlines. Michael, Mike, 358 00:21:46,040 --> 00:21:49,200 Speaker 1: thank you very much. Some presidential candidates will take today 359 00:21:49,240 --> 00:21:52,440 Speaker 1: and to do some soul searching about their campaigns. After 360 00:21:52,560 --> 00:21:56,000 Speaker 1: last night's New Hampshire primaries. Chris Christie headed back to 361 00:21:56,040 --> 00:22:00,200 Speaker 1: New Jersey to reevaluated campaign. Meanwhile, Carl fier Arena, who 362 00:22:00,240 --> 00:22:02,920 Speaker 1: finished near the bottom in New Hampshire last night, says 363 00:22:03,000 --> 00:22:07,040 Speaker 1: she will continue. We feel very encouraged. You've given us 364 00:22:07,040 --> 00:22:08,919 Speaker 1: wind at our back, and so, as I said to 365 00:22:09,000 --> 00:22:11,119 Speaker 1: many of you as I walked through the room tonight, 366 00:22:12,359 --> 00:22:17,879 Speaker 1: we are going to keep going. Democrats hold caucuses in 367 00:22:17,920 --> 00:22:21,400 Speaker 1: Nevada the same day South Carolina holds its Republican primary. 368 00:22:21,440 --> 00:22:25,479 Speaker 1: On February. Hillary Clinton lost to Vermont Senator Bernie Sanders 369 00:22:25,520 --> 00:22:29,280 Speaker 1: and yesterday's New Hampshire primary by roughly one percentage points. 370 00:22:29,560 --> 00:22:32,480 Speaker 1: Attorneys for Bill Cosby have asked that a defamation lawsuit 371 00:22:32,560 --> 00:22:35,480 Speaker 1: filed in federal court in Massachusetts be put on hold 372 00:22:35,520 --> 00:22:38,679 Speaker 1: as he defends himself in the criminal case in Pennsylvania. 373 00:22:39,080 --> 00:22:42,920 Speaker 1: Also yesterday, at California, judge dismissed a model's defamation claim 374 00:22:42,960 --> 00:22:46,480 Speaker 1: against a former lawyer. For Cosby Global News twenty four 375 00:22:46,520 --> 00:22:50,400 Speaker 1: hours a day, powered by our dred journalists more than 376 00:22:50,440 --> 00:22:53,400 Speaker 1: one hundred fifty news bureaus from around the world. I'm 377 00:22:53,440 --> 00:22:56,720 Speaker 1: Michael Barr, Mike, Thank you, Michael of Time Now for 378 00:22:56,760 --> 00:23:01,440 Speaker 1: the Bloomberg NBC Sports Update with John Stash, John Alright, Mike, 379 00:23:01,480 --> 00:23:04,440 Speaker 1: new coach, but familiar script at the Garden, the Knick 380 00:23:04,440 --> 00:23:06,560 Speaker 1: explained for the first time under Kurt Rambis, they again 381 00:23:06,640 --> 00:23:08,720 Speaker 1: fell behind early. They were down sixteen in the first 382 00:23:08,760 --> 00:23:11,800 Speaker 1: quarter and let Washington go for sixty three first half points. 383 00:23:12,119 --> 00:23:14,520 Speaker 1: Nicks rallied back but lost at the end one eleven, 384 00:23:14,640 --> 00:23:17,359 Speaker 1: one oh eight. The Wizard's backcourt led the way, with 385 00:23:17,440 --> 00:23:21,200 Speaker 1: John Wall scoring with seventeen assists. Bradley Beal at twenty six. 386 00:23:21,200 --> 00:23:23,640 Speaker 1: Carmelo Anthony led the Knicks with thirty three and made 387 00:23:23,640 --> 00:23:27,879 Speaker 1: his first comments since Phil Jackson fired Derek Fisher. I 388 00:23:27,920 --> 00:23:31,679 Speaker 1: didn't see coming, Uh, nobody saw coming. You have to 389 00:23:31,720 --> 00:23:34,720 Speaker 1: continue to put your trust in the fiel at this point, 390 00:23:34,800 --> 00:23:37,639 Speaker 1: what could you do? Can't side away from that, can 391 00:23:37,720 --> 00:23:40,720 Speaker 1: go against it, you know. So for me, as you know, continue, 392 00:23:40,960 --> 00:23:42,879 Speaker 1: I have to trust and I decided to stay here. 393 00:23:42,920 --> 00:23:46,439 Speaker 1: I decided to, uh make that decision to trust in 394 00:23:46,520 --> 00:23:49,119 Speaker 1: the Knicks and trust in the field, uh, you know, 395 00:23:49,119 --> 00:23:51,080 Speaker 1: and I have to continue doing that. Nick's hit the 396 00:23:51,160 --> 00:23:52,960 Speaker 1: ll Star break, having lost six in a row, ten 397 00:23:53,000 --> 00:23:55,119 Speaker 1: of eleven, the fallow and five games out for a 398 00:23:55,119 --> 00:23:57,800 Speaker 1: playoff spot. Marty bro during night in New Jersey, the 399 00:23:57,800 --> 00:24:00,560 Speaker 1: winner of three Stanley Cups in his one seasons with 400 00:24:00,600 --> 00:24:03,199 Speaker 1: the Devils at his number thirty raised to the rafters. 401 00:24:03,240 --> 00:24:06,639 Speaker 1: Devils van got by Edmonton Sudah one. Islanders remain just 402 00:24:06,800 --> 00:24:09,160 Speaker 1: ahead of the Devil's after a three to to shootout 403 00:24:09,160 --> 00:24:12,520 Speaker 1: win at Columbus College Groups twenty win for Monument with 404 00:24:12,640 --> 00:24:17,359 Speaker 1: the Bloomberg NBC Sports Update, I'm John Stamps. Thank you John. 405 00:24:17,520 --> 00:24:20,280 Speaker 1: Right now, we're looking at futures that are higher ahead 406 00:24:20,320 --> 00:24:23,159 Speaker 1: of Janet Yelling her testimony to be released by the 407 00:24:23,200 --> 00:24:26,640 Speaker 1: House Financial Services Committee at eight thirty a m. Wall 408 00:24:26,680 --> 00:24:29,720 Speaker 1: Street time, Tom and I will have the complete breakdown 409 00:24:29,800 --> 00:24:33,200 Speaker 1: for you when those headlines are released. This is Bloomberg 410 00:24:33,280 --> 00:24:41,280 Speaker 1: Radio and this is Bloomberg Surveillance. I'm Michael McKee along 411 00:24:41,680 --> 00:24:45,160 Speaker 1: with Tom Keane. The event of the day, the Fed 412 00:24:45,280 --> 00:24:48,800 Speaker 1: Chair goes to Capitol Hill ten am. Testimony eight thirty am. 413 00:24:48,880 --> 00:24:52,520 Speaker 1: The prepared remarks are released, and as I mentioned, we 414 00:24:52,560 --> 00:24:55,440 Speaker 1: will have all of those for you at that time 415 00:24:55,800 --> 00:24:58,560 Speaker 1: ahead of Janet Yells testimony. S ANDP features are up 416 00:24:58,560 --> 00:25:01,280 Speaker 1: twenty points now one percent at Dow futures are up 417 00:25:01,280 --> 00:25:05,520 Speaker 1: a hundred eight tenths. Nasdaq features up fifty five points 418 00:25:05,520 --> 00:25:10,280 Speaker 1: one point four percent. Now it's time for the Bloomberg 419 00:25:10,440 --> 00:25:12,640 Speaker 1: n j I T STEM Report, brought to you by 420 00:25:12,800 --> 00:25:16,600 Speaker 1: New Jersey Institute of Technology, partnering with government and industry 421 00:25:16,600 --> 00:25:19,560 Speaker 1: to apply the university's world class research assets to innovate 422 00:25:19,640 --> 00:25:22,359 Speaker 1: and spur economic growth. Learn more at n j I 423 00:25:22,480 --> 00:25:26,040 Speaker 1: T dot e DU here's John Tucher well Michael. Google's 424 00:25:26,119 --> 00:25:29,200 Speaker 1: self driving cars are just a little closer to hitting 425 00:25:29,200 --> 00:25:32,640 Speaker 1: the roads. Federal regulators have agreed with Google that its 426 00:25:32,640 --> 00:25:36,159 Speaker 1: cars will not have a driver in the traditional sense. 427 00:25:36,680 --> 00:25:39,679 Speaker 1: Google asks regulators back in November for an interpretation of 428 00:25:39,720 --> 00:25:43,719 Speaker 1: safety standards in cars it seeks to produce without traditional controls. 429 00:25:44,400 --> 00:25:47,520 Speaker 1: Google has been getting mixed signals from federal and state 430 00:25:47,560 --> 00:25:50,639 Speaker 1: regulators on the path to putting itself driving cars in 431 00:25:50,680 --> 00:25:53,919 Speaker 1: the road. California, for instance, has said the cars aren't 432 00:25:53,920 --> 00:25:57,000 Speaker 1: smart enough yet to be sold to the public without 433 00:25:57,000 --> 00:26:00,440 Speaker 1: a steering wheel, brake pedals, and a licensed driver behind 434 00:26:00,440 --> 00:26:04,160 Speaker 1: the wheel. US aviation safety officials are raising new warnings 435 00:26:04,160 --> 00:26:07,200 Speaker 1: about the dangers of carrying bolt shipments of lithium based 436 00:26:07,280 --> 00:26:11,880 Speaker 1: batteries on commercial flights. The National Transportation Safety Board yesterday 437 00:26:12,000 --> 00:26:16,320 Speaker 1: urged that battery shipments be separated from other flammable materials 438 00:26:16,320 --> 00:26:19,640 Speaker 1: on cargo planes and that limits be placed on how 439 00:26:19,640 --> 00:26:23,520 Speaker 1: many can be transported. Hours earlier, the fa A senter 440 00:26:23,560 --> 00:26:26,760 Speaker 1: notice the airlines urging them to study the fire at 441 00:26:26,800 --> 00:26:31,480 Speaker 1: explosion risks of lithium shipments linked to three accidents. And 442 00:26:31,680 --> 00:26:35,359 Speaker 1: that is this morning's Bloomberg n G I T Stan report. 443 00:26:35,480 --> 00:26:38,640 Speaker 1: Mike John Tucker, thank you very much. Well, we were 444 00:26:38,640 --> 00:26:41,680 Speaker 1: just talking with Bob Sinch about the dollar and Janet 445 00:26:41,760 --> 00:26:45,560 Speaker 1: Yellen's perception thereof Let's bring in Mark Chandler. Now he 446 00:26:45,920 --> 00:26:48,880 Speaker 1: is the head of currencies for Brown Brothers Harriman and 447 00:26:48,920 --> 00:26:52,720 Speaker 1: Mark you not in today's note to clients that that's 448 00:26:52,760 --> 00:26:55,600 Speaker 1: going to be an important topic for the FED chair. 449 00:26:56,640 --> 00:27:00,760 Speaker 1: What impact is the dollar having on their thinking? Lately 450 00:27:00,840 --> 00:27:04,119 Speaker 1: the dollar's been going down. Yeah, I think that some 451 00:27:04,160 --> 00:27:07,240 Speaker 1: people thought that the settlerserve is going to be constrained 452 00:27:07,359 --> 00:27:09,440 Speaker 1: in its ability to raise interest rates by the strength 453 00:27:09,480 --> 00:27:12,600 Speaker 1: of the dollar instead a trade weighted basis. And looks 454 00:27:12,640 --> 00:27:14,680 Speaker 1: like the dollars come off a bit, not just because 455 00:27:14,720 --> 00:27:18,440 Speaker 1: the Canadian dollars rise, but also because, as Bob pointed out, 456 00:27:18,440 --> 00:27:21,639 Speaker 1: the recent strength of the end. Yes, but if the 457 00:27:21,720 --> 00:27:25,760 Speaker 1: FED is perceived as likely to raise rates, does that 458 00:27:25,800 --> 00:27:30,199 Speaker 1: reverse it? Could? I mean, I think that partly it's 459 00:27:30,240 --> 00:27:32,680 Speaker 1: not just in the FED stand I think that the 460 00:27:32,960 --> 00:27:34,919 Speaker 1: out of the dollar is also partly a function of 461 00:27:34,920 --> 00:27:37,399 Speaker 1: what the ECB is going to do next month. And 462 00:27:37,440 --> 00:27:39,399 Speaker 1: the ECB is signaling that it's going to have to 463 00:27:39,440 --> 00:27:43,280 Speaker 1: ease policy further. Even someone like the Buddhispank, President Environment 464 00:27:43,800 --> 00:27:47,040 Speaker 1: has indicated that inflation forecast need to be cut dramatically. 465 00:27:47,080 --> 00:27:50,680 Speaker 1: In Europe, and just today you'll notice that the UK 466 00:27:51,080 --> 00:27:54,320 Speaker 1: not part of the Eurozone, but in general Europe, including France. 467 00:27:54,720 --> 00:27:59,280 Speaker 1: The UK's numbers today, Germany numbers yesterday. Industrial production basically 468 00:27:59,359 --> 00:28:01,640 Speaker 1: collapsed and all sweet countries at the end of last 469 00:28:01,720 --> 00:28:04,800 Speaker 1: year much more than people thought, and not just uh 470 00:28:05,000 --> 00:28:08,080 Speaker 1: cant is right. It off to warmer weather and lower 471 00:28:08,160 --> 00:28:10,520 Speaker 1: energy production. That's part of it, but there's a there's 472 00:28:10,520 --> 00:28:13,679 Speaker 1: bigger weakness there. Well, is there a recession in training? 473 00:28:13,800 --> 00:28:18,120 Speaker 1: The markets predicting something or are they reflecting something? But 474 00:28:18,280 --> 00:28:20,280 Speaker 1: I think that there's a lot of talk of the 475 00:28:20,400 --> 00:28:24,199 Speaker 1: US recession I think is grossly exaggerated. Here's why, in 476 00:28:24,280 --> 00:28:26,359 Speaker 1: order to get a control, in order to get a recession, 477 00:28:26,359 --> 00:28:28,439 Speaker 1: which I'm not sure what it really means, but at 478 00:28:28,480 --> 00:28:31,800 Speaker 1: le if it means anything, it means contracting economy. And 479 00:28:32,040 --> 00:28:34,560 Speaker 1: it's true that Q four in the US was merely 480 00:28:34,640 --> 00:28:38,680 Speaker 1: stagnant initial estimate with zero point seven but after the 481 00:28:38,760 --> 00:28:42,200 Speaker 1: jobs dated last week, after the wholesale trade in inventories 482 00:28:42,320 --> 00:28:47,040 Speaker 1: data this week, the Atlanta Fed GDP now which tracks GDP, 483 00:28:48,280 --> 00:28:51,880 Speaker 1: is two and a half percent for Q one. So yes, 484 00:28:51,920 --> 00:28:53,880 Speaker 1: it is a common these days for the econmoy to 485 00:28:53,880 --> 00:28:55,959 Speaker 1: be a bit more volatile. We have some strong quarters, 486 00:28:55,960 --> 00:28:59,320 Speaker 1: some weak quarters. Fourth quarter was week. First quarter looks 487 00:28:59,320 --> 00:29:02,640 Speaker 1: to be strong, and I just don't see what two quarters, 488 00:29:02,680 --> 00:29:04,920 Speaker 1: for example, for a rule of some two quarters negative 489 00:29:04,960 --> 00:29:06,880 Speaker 1: growth what two quarters of it was going to be 490 00:29:07,000 --> 00:29:09,120 Speaker 1: for negative growth in the US. And I think that 491 00:29:09,240 --> 00:29:13,200 Speaker 1: some of the weakness has been coming from manufacturing. But 492 00:29:13,280 --> 00:29:16,400 Speaker 1: when you look deeper into the I S M numbers, 493 00:29:16,840 --> 00:29:18,840 Speaker 1: you'll see two things that I've been focusing on. One 494 00:29:19,120 --> 00:29:22,440 Speaker 1: is an increase in new orders that's forward looking, that's positive. 495 00:29:22,680 --> 00:29:25,200 Speaker 1: The second thing is this balance between new orders and 496 00:29:25,240 --> 00:29:29,640 Speaker 1: inventories that also suggested output it's likely to increase. And 497 00:29:29,640 --> 00:29:33,760 Speaker 1: remember what we saw on Friday, a strong rise in 498 00:29:33,840 --> 00:29:36,760 Speaker 1: manufacturing employment. And I forget what the exact number was. 499 00:29:36,760 --> 00:29:39,880 Speaker 1: I think it was something like increase, much more than 500 00:29:39,920 --> 00:29:43,400 Speaker 1: the market expected. So I'm thinking that the manufacturing sector 501 00:29:43,440 --> 00:29:46,320 Speaker 1: is close to bottoming out, and that the impact of 502 00:29:46,320 --> 00:29:50,240 Speaker 1: lower lower oil prices, lower gas lead prices boosted auto 503 00:29:50,280 --> 00:29:54,440 Speaker 1: sales last month to nearly a record level, and last 504 00:29:54,480 --> 00:29:57,680 Speaker 1: year was a record level record for auto sales. In general, 505 00:29:58,160 --> 00:30:02,320 Speaker 1: consumption was at three point one percent last year, strongest 506 00:30:02,320 --> 00:30:05,640 Speaker 1: in a decade. But are we seeing a confidence hangover 507 00:30:06,000 --> 00:30:09,320 Speaker 1: for business spending in particular? I don't know a lot 508 00:30:09,360 --> 00:30:11,480 Speaker 1: of contents spill over. I think that in the fourth 509 00:30:11,560 --> 00:30:14,200 Speaker 1: year of a presidential of a second term of a 510 00:30:14,280 --> 00:30:18,800 Speaker 1: presidential So the second term last year stock market tends 511 00:30:18,840 --> 00:30:20,520 Speaker 1: to go down. I think it goes down about ten 512 00:30:20,560 --> 00:30:23,440 Speaker 1: percent on average. I think that that a lot of 513 00:30:23,480 --> 00:30:26,520 Speaker 1: these models are forecasting recession, are looking at putting a 514 00:30:26,520 --> 00:30:29,400 Speaker 1: lot of weight on the former stock market and perhaps 515 00:30:29,440 --> 00:30:31,040 Speaker 1: to all these products that you know where we sit. 516 00:30:31,200 --> 00:30:35,680 Speaker 1: My first experience was equity market crash, and many people 517 00:30:35,720 --> 00:30:37,760 Speaker 1: said this was a repeat of the Great Depression. And 518 00:30:37,800 --> 00:30:39,880 Speaker 1: of course we didn't even have a recession. You need 519 00:30:39,920 --> 00:30:41,640 Speaker 1: not an eighty seven, not in eight eight. We don't 520 00:30:41,640 --> 00:30:43,760 Speaker 1: get a recession for a couple of years afterwards. So 521 00:30:43,800 --> 00:30:45,880 Speaker 1: I say the stock market, like other people have noted, 522 00:30:46,080 --> 00:30:50,240 Speaker 1: has predicted many of recessions that don't materialize. Mark Tandler 523 00:30:50,360 --> 00:30:52,960 Speaker 1: is whether us from Brown Brothers harem and will continue 524 00:30:53,000 --> 00:30:56,800 Speaker 1: our conversations in just a moment. We'll take a look 525 00:30:56,800 --> 00:31:02,040 Speaker 1: at the Central bank divergence. UM has virgins peaked question 526 00:31:02,560 --> 00:31:06,360 Speaker 1: for Mr Chandler right now as we get ready for 527 00:31:06,520 --> 00:31:09,240 Speaker 1: Janet jens testimony. We're looking at a ten year yield 528 00:31:09,240 --> 00:31:14,080 Speaker 1: of one point seven one point for the five year, 529 00:31:14,120 --> 00:31:17,280 Speaker 1: the two year, seventy two basis points. This is Bloomberg 530 00:31:17,360 --> 00:31:23,040 Speaker 1: Radio Worldwide. Bloomberg aunces brought to you by Mercedes Benz 531 00:31:23,080 --> 00:31:25,800 Speaker 1: Tri State Dealer. When it comes to winter state elements, 532 00:31:25,800 --> 00:31:28,440 Speaker 1: put your best four wheels forward with Mercedes Benz Formatic 533 00:31:28,440 --> 00:31:30,560 Speaker 1: All Wheel Drive. Is it your Mercedes Benz Tri State 534 00:31:30,600 --> 00:31:39,560 Speaker 1: Dealer for a test drive? Today? Global Business News twenty 535 00:31:39,560 --> 00:31:42,560 Speaker 1: four hours a day at Bloomberg dot com, the Radio 536 00:31:42,600 --> 00:31:45,440 Speaker 1: plus mobile app and on your radio. This is a 537 00:31:45,480 --> 00:31:49,280 Speaker 1: Bloomberg Business Flash and I'm Karen Moscow. This updates brought 538 00:31:49,320 --> 00:31:51,440 Speaker 1: to you by Sector Spider a t F so I 539 00:31:51,480 --> 00:31:53,360 Speaker 1: buy a single stock when you can invest in the 540 00:31:53,520 --> 00:31:57,120 Speaker 1: entire sector. Visits Sector spd r s dot com are 541 00:31:57,120 --> 00:32:00,400 Speaker 1: called WENT six six Sector e t f WE Stock 542 00:32:00,440 --> 00:32:03,560 Speaker 1: index futures are higher to mirror gains in European shares 543 00:32:03,600 --> 00:32:06,760 Speaker 1: and oil prices, and indicating the SNP five hundred will 544 00:32:06,800 --> 00:32:09,920 Speaker 1: rebound from its lowest levels in turteen. We checked the 545 00:32:09,920 --> 00:32:12,920 Speaker 1: markets every fifteen minutes throughout the trading day on Bloomberg 546 00:32:13,280 --> 00:32:16,440 Speaker 1: SNP EVENI futures of twenty three points, Dowie Mini futures 547 00:32:16,440 --> 00:32:19,320 Speaker 1: of a hundred, fifty six, NAS doc Emni futures up 548 00:32:19,360 --> 00:32:21,880 Speaker 1: sixty three the acts in Germany's up two and a 549 00:32:21,920 --> 00:32:24,840 Speaker 1: half percent, so is the CAC in Paris Tenure Treasury 550 00:32:24,840 --> 00:32:27,800 Speaker 1: down twelve thirty seconds, the yield one point seven six percent. 551 00:32:28,200 --> 00:32:30,400 Speaker 1: NI back screwed oil of two point three percent or 552 00:32:30,440 --> 00:32:32,920 Speaker 1: sixty five cents to twenty eight fifty nine A barrel 553 00:32:33,160 --> 00:32:36,080 Speaker 1: comes goal down one point three percent or fifteen dollars 554 00:32:36,080 --> 00:32:39,440 Speaker 1: thirty cents to eleven eighty three thirty announced the euro 555 00:32:39,560 --> 00:32:42,320 Speaker 1: a dollar twelve sixty six. The N one fourteen point 556 00:32:42,400 --> 00:32:45,560 Speaker 1: nine seven. Time Warner up six tenths percent this morning 557 00:32:45,600 --> 00:32:48,560 Speaker 1: after profit beat analysts estimates and after announcing a five 558 00:32:48,600 --> 00:32:51,440 Speaker 1: billion dollar buyback. But Walt Disney is down more than 559 00:32:51,480 --> 00:32:54,880 Speaker 1: three and a half percent as investors overlooked record earnings 560 00:32:54,960 --> 00:32:59,160 Speaker 1: to focus on flagging profits at ESPN Sports Network, and 561 00:32:59,280 --> 00:33:03,520 Speaker 1: that's of bloom for business flash, Tom and Mike, thank 562 00:33:03,560 --> 00:33:07,000 Speaker 1: you very much. Karen Moscow, we're talking with Mark Chandler. 563 00:33:07,040 --> 00:33:09,960 Speaker 1: He's the head of currency strategy for Brown Brothers Harriman 564 00:33:10,080 --> 00:33:12,320 Speaker 1: and Mark I teased this ahead of time, but um, 565 00:33:13,000 --> 00:33:17,520 Speaker 1: I'm curious because you were talking earlier about um what 566 00:33:17,560 --> 00:33:20,360 Speaker 1: other central banks do in connection with what the FED does? 567 00:33:21,400 --> 00:33:24,080 Speaker 1: Has policy divergence peaked in the sense that the Fed 568 00:33:24,160 --> 00:33:27,080 Speaker 1: seems now to be backing off from a rate hike, 569 00:33:27,400 --> 00:33:32,560 Speaker 1: and it isn't clear UH from the Bank of Japan's 570 00:33:32,720 --> 00:33:35,360 Speaker 1: UH efforts that that they can get a lot out 571 00:33:35,440 --> 00:33:42,120 Speaker 1: of additional extraordinary policies. Yes, I look, the Fed last 572 00:33:42,200 --> 00:33:44,800 Speaker 1: told us what they were thinking in December when they 573 00:33:44,800 --> 00:33:46,800 Speaker 1: said they will raised rates, when they thought that there 574 00:33:46,840 --> 00:33:49,200 Speaker 1: would be conditions would be sufficient. But then the raise 575 00:33:49,320 --> 00:33:52,040 Speaker 1: rates four times this year. Most people in the market 576 00:33:52,040 --> 00:33:53,800 Speaker 1: didn't believe it. I thought there was scope for two 577 00:33:53,880 --> 00:33:56,280 Speaker 1: hikes this year, and I still think the scope for 578 00:33:56,320 --> 00:33:58,680 Speaker 1: two hikes this year. The market is basically pricing out 579 00:33:59,240 --> 00:34:01,880 Speaker 1: UH note, basically pricing in less than a fifty percent 580 00:34:01,960 --> 00:34:06,920 Speaker 1: chance of even one hike. Has policy divergence peaked? And 581 00:34:06,920 --> 00:34:09,439 Speaker 1: this is this is a key question, especially for people 582 00:34:09,480 --> 00:34:12,600 Speaker 1: like me, who's who predicate our bullish dollar view on 583 00:34:12,680 --> 00:34:15,879 Speaker 1: this divergence of policy. And I think even as the Fed, 584 00:34:15,880 --> 00:34:18,200 Speaker 1: we're not to RaSE rate it all this year. Imagine, 585 00:34:18,239 --> 00:34:20,840 Speaker 1: as you're a bank, you've got some extra liquidity, You 586 00:34:20,920 --> 00:34:23,799 Speaker 1: give it to the Bank of Japan and they charge 587 00:34:23,800 --> 00:34:26,120 Speaker 1: you ten basis points. You give it to the e 588 00:34:26,200 --> 00:34:28,680 Speaker 1: c B and right now they charge you thirty basis points. 589 00:34:28,680 --> 00:34:30,919 Speaker 1: It could be more. They charge you more. Next month, 590 00:34:32,200 --> 00:34:34,759 Speaker 1: you give that excess liquidity to the Federal Reserve and 591 00:34:34,800 --> 00:34:37,719 Speaker 1: they give you fifty basis points. I think that the 592 00:34:37,760 --> 00:34:40,719 Speaker 1: problem that we're having the market, I think is complicated 593 00:34:40,760 --> 00:34:44,720 Speaker 1: because because I'd see things as having to there's two 594 00:34:44,880 --> 00:34:48,720 Speaker 1: circuits of capital. One circuit is because of these negative 595 00:34:48,719 --> 00:34:51,719 Speaker 1: interest rates overseas, money is coming into the US. And 596 00:34:51,719 --> 00:34:53,960 Speaker 1: you can see this by looking at how big of 597 00:34:53,960 --> 00:34:56,560 Speaker 1: a yield decline we've had in our bond market. This 598 00:34:56,760 --> 00:34:59,680 Speaker 1: is money coming into UH. Partly it's money that's being 599 00:34:59,680 --> 00:35:03,400 Speaker 1: ship stought of these negative yielding German and Japanese bonds. 600 00:35:03,520 --> 00:35:05,919 Speaker 1: Look at this. The German yield curve is negative out 601 00:35:06,000 --> 00:35:09,520 Speaker 1: for eight years, the Japanese yield curve is negative out 602 00:35:09,520 --> 00:35:12,400 Speaker 1: to nine years. The Swiss curve is negative out to 603 00:35:12,520 --> 00:35:16,359 Speaker 1: fifteen years. So I say, people buy US assets because 604 00:35:16,360 --> 00:35:19,719 Speaker 1: they have a positive return. But in the shortland there's 605 00:35:19,760 --> 00:35:22,719 Speaker 1: another circuit of capital that's overwhelming this, and that is 606 00:35:22,760 --> 00:35:26,239 Speaker 1: people have used the euro and the end to finance 607 00:35:26,680 --> 00:35:30,160 Speaker 1: purchases of other assets. These other assets could be other currencies, 608 00:35:30,160 --> 00:35:33,600 Speaker 1: that could be equities, and as they've gotten out of 609 00:35:33,640 --> 00:35:36,640 Speaker 1: those assets, they've had to unwind the funding trade. Of it. 610 00:35:37,040 --> 00:35:39,399 Speaker 1: Some people call that a carry trade. I'm not so sure. 611 00:35:39,480 --> 00:35:43,080 Speaker 1: I think it's you're basically borrowing cheap money and you're 612 00:35:43,120 --> 00:35:46,200 Speaker 1: buying a risker asset. And whether that riskier asset return 613 00:35:46,320 --> 00:35:48,440 Speaker 1: comes from yield, which would be the carry trade, or 614 00:35:48,480 --> 00:35:52,520 Speaker 1: just asset performance capital gains, it doesn't really matter to me. 615 00:35:52,719 --> 00:35:54,480 Speaker 1: What key here is that you get to unwind this 616 00:35:55,200 --> 00:35:59,680 Speaker 1: and that unwinding of these positions is overwhelming, this divergence 617 00:36:00,040 --> 00:36:06,920 Speaker 1: of policy and this extreme interest rate differential. So where 618 00:36:06,920 --> 00:36:11,080 Speaker 1: where do we look for a clue to what happens 619 00:36:11,080 --> 00:36:13,440 Speaker 1: with the dollar? If if we can't be sure of 620 00:36:13,880 --> 00:36:16,680 Speaker 1: interest rate differential? Oh no, I'm saying that we can 621 00:36:16,760 --> 00:36:19,759 Speaker 1: be that. So for I think oftentimes when I read 622 00:36:19,840 --> 00:36:23,480 Speaker 1: news warriors, when I listen to business shows, we sometimes 623 00:36:23,560 --> 00:36:26,160 Speaker 1: talk is if the only people, the only market participants 624 00:36:26,200 --> 00:36:29,839 Speaker 1: are short term hedge funds, levage players, but people are 625 00:36:29,840 --> 00:36:31,960 Speaker 1: trying to manage their pension funds. And I'm not so 626 00:36:32,160 --> 00:36:35,160 Speaker 1: sure that it matters then in the short run that 627 00:36:35,320 --> 00:36:39,920 Speaker 1: these unwinding of trades, which is which is weighing on 628 00:36:39,960 --> 00:36:42,799 Speaker 1: the dollar, listening to euro, listening to the end, whether 629 00:36:42,880 --> 00:36:44,560 Speaker 1: that is what we should be focusing on we're trying 630 00:36:44,560 --> 00:36:46,560 Speaker 1: to manage our pension when it's five or ten years 631 00:36:46,560 --> 00:36:49,319 Speaker 1: out from now or twenty years out from now, I 632 00:36:49,360 --> 00:36:52,520 Speaker 1: think that the divergence remains in effect. And even if 633 00:36:52,520 --> 00:36:55,560 Speaker 1: it doesn't come from the U S side of the equation, 634 00:36:56,440 --> 00:36:59,720 Speaker 1: I think it's clear that we should be expecting further 635 00:37:00,120 --> 00:37:03,000 Speaker 1: from the European Central Bank, and we should probably be 636 00:37:03,040 --> 00:37:06,560 Speaker 1: expecting further easing from the Bank of Japan. I expect 637 00:37:06,560 --> 00:37:08,880 Speaker 1: we can also get further easing from some other countries, 638 00:37:09,000 --> 00:37:11,960 Speaker 1: including China. And this I think even as if I 639 00:37:12,040 --> 00:37:13,799 Speaker 1: doesn't do anything, and which I think is I think 640 00:37:13,800 --> 00:37:15,920 Speaker 1: the FED will be raising rates this year. And this 641 00:37:16,000 --> 00:37:18,320 Speaker 1: is the other point about the recession. Look at what happened. 642 00:37:18,440 --> 00:37:20,359 Speaker 1: The Atlanta said, we're talking about two and a half 643 00:37:20,360 --> 00:37:23,560 Speaker 1: the cent growth Europe. I have to pay the inducttional 644 00:37:23,600 --> 00:37:26,200 Speaker 1: production numbers. Country like the UK may have to revise 645 00:37:26,320 --> 00:37:29,399 Speaker 1: down queue four g d P and so I think 646 00:37:29,400 --> 00:37:32,319 Speaker 1: the policy divergence is still in effect as just being 647 00:37:32,360 --> 00:37:34,719 Speaker 1: like it's being overshadowed in the short run. But what 648 00:37:34,800 --> 00:37:37,120 Speaker 1: we need to count on for longer term, medium term 649 00:37:37,120 --> 00:37:41,200 Speaker 1: investors is that the US pursued a very aggressive policy 650 00:37:41,280 --> 00:37:47,040 Speaker 1: early on and that is having payoff several years later. Mark, 651 00:37:47,080 --> 00:37:50,520 Speaker 1: Tom King, good morning. I just wandered into the conversation. 652 00:37:51,000 --> 00:37:53,960 Speaker 1: I look at dollar strength, I look at dollar dynamics 653 00:37:54,040 --> 00:37:56,920 Speaker 1: out there, and the bet has to be made. You 654 00:37:57,000 --> 00:38:00,160 Speaker 1: know that markets can swing the excess. Where's the needs 655 00:38:00,160 --> 00:38:04,440 Speaker 1: your met right now? Where's the overbet by market participants? 656 00:38:05,600 --> 00:38:08,520 Speaker 1: I'd say, in my mind, Tom, I think the I 657 00:38:08,560 --> 00:38:10,880 Speaker 1: think that you know, many people have been critical that 658 00:38:10,960 --> 00:38:13,560 Speaker 1: the Federal Reserve has been too dubbish, and now the 659 00:38:13,600 --> 00:38:15,680 Speaker 1: Federal Reserve says, look, we're gonna be raising interest rates, 660 00:38:15,680 --> 00:38:18,120 Speaker 1: and the market says, no, you're not. So to me, 661 00:38:18,160 --> 00:38:21,040 Speaker 1: it's not so much about the March meeting. I mean, 662 00:38:21,200 --> 00:38:23,759 Speaker 1: it seems to be pretty clear that in December there 663 00:38:23,800 --> 00:38:25,640 Speaker 1: was a reasonable chance for a March meeting. But given 664 00:38:25,640 --> 00:38:28,680 Speaker 1: the turbulence in the market, given the tightening of financial conditions, 665 00:38:28,840 --> 00:38:30,799 Speaker 1: there's less of a chance of the March fight. But 666 00:38:31,719 --> 00:38:34,520 Speaker 1: to say that there's a little chance, not even a 667 00:38:34,520 --> 00:38:36,840 Speaker 1: fifty fifty chance, that the Federates rates by the end 668 00:38:36,880 --> 00:38:40,520 Speaker 1: of the year, I think is a gross underestimation of 669 00:38:40,560 --> 00:38:44,000 Speaker 1: the U S economy. It does not appreciate that at 670 00:38:44,000 --> 00:38:48,560 Speaker 1: full employment, we should be expecting further wage pressure. And 671 00:38:49,400 --> 00:38:51,040 Speaker 1: this is the thing I think that allowed people are missing. 672 00:38:51,200 --> 00:38:54,240 Speaker 1: Despite the strength of the dollar, despite the falling oil prices, 673 00:38:54,320 --> 00:38:59,040 Speaker 1: last year, core inflation rose, core CPI trended higher all 674 00:38:59,160 --> 00:39:03,960 Speaker 1: last year. Core core pc to flator, which is what 675 00:39:04,040 --> 00:39:07,680 Speaker 1: the Fed targets also rose last year, not by a lot, 676 00:39:08,520 --> 00:39:10,760 Speaker 1: but the direction is, I think is the right direction. 677 00:39:10,880 --> 00:39:13,960 Speaker 1: And what what's gonna fuel inflation. What's going to fuel 678 00:39:13,960 --> 00:39:18,680 Speaker 1: inflation is a price of housing, shelter costs, medical services. 679 00:39:18,840 --> 00:39:21,799 Speaker 1: And if our earnings data is any indication to some 680 00:39:21,920 --> 00:39:24,160 Speaker 1: upper pressure on wages. Might not be a lot, it's 681 00:39:24,200 --> 00:39:27,160 Speaker 1: never enough for me, but there'll be some upper pressure 682 00:39:27,160 --> 00:39:29,719 Speaker 1: on wages. And combine these things and we're looking at 683 00:39:29,800 --> 00:39:33,160 Speaker 1: higher inflation, full employment. You need a quiet place, Mike 684 00:39:33,200 --> 00:39:34,600 Speaker 1: the key. You know this is better than I do, 685 00:39:34,680 --> 00:39:36,720 Speaker 1: but you need a quiet place to make the shift. 686 00:39:37,120 --> 00:39:40,920 Speaker 1: Does Janet yell and shift this morning? I don't see 687 00:39:40,920 --> 00:39:43,319 Speaker 1: how Janet Young can really shift in a sense that 688 00:39:43,600 --> 00:39:46,960 Speaker 1: we just had the effort m C statement late January. 689 00:39:47,080 --> 00:39:49,680 Speaker 1: It's not even two weeks old. But the stead told 690 00:39:49,719 --> 00:39:52,200 Speaker 1: us there is that it's watching carefully what's going on 691 00:39:52,200 --> 00:39:55,200 Speaker 1: in the global economy and the financial markets to see 692 00:39:55,280 --> 00:39:58,680 Speaker 1: if if it does really impact the economy or if 693 00:39:58,680 --> 00:40:01,279 Speaker 1: it assesses their risk assessment. Was actually the changes their 694 00:40:01,360 --> 00:40:06,080 Speaker 1: risk assessment in December they said that we're fairly balanced. 695 00:40:06,560 --> 00:40:09,920 Speaker 1: In January they said we're watching conditions to see if 696 00:40:09,920 --> 00:40:12,960 Speaker 1: the risk bound has changed, meaning that they hadn't changed 697 00:40:13,000 --> 00:40:14,879 Speaker 1: it yet, but they instead of like the watchful weight. 698 00:40:15,440 --> 00:40:17,000 Speaker 1: So I think that Yelling is gonna have to walk 699 00:40:17,000 --> 00:40:19,640 Speaker 1: a very's He's gonna have to balance her views. One 700 00:40:19,719 --> 00:40:23,520 Speaker 1: is it market turbulence versus the underlying strings of the 701 00:40:23,560 --> 00:40:26,200 Speaker 1: US economy. And that's why I mentioned is Atlanta fed. 702 00:40:26,239 --> 00:40:30,239 Speaker 1: The US economy looks like it's improving dramatically. From Dignitude 703 00:40:30,280 --> 00:40:33,160 Speaker 1: que four Mark Chammon, thank you so much. Greatly appreciated. 704 00:40:33,200 --> 00:40:35,920 Speaker 1: With Brown Brothers Harriman this morning. Greg Vill. Yeah, he 705 00:40:35,960 --> 00:40:39,640 Speaker 1: gave a terrific perspective on his New Hampshire yesterday. He 706 00:40:39,719 --> 00:40:44,759 Speaker 1: publishes moments ago obviously on New Hampshire and South Carolina, 707 00:40:45,360 --> 00:40:48,879 Speaker 1: but also on Janet Yelling. Let's let's let's review this note. 708 00:40:48,920 --> 00:40:51,319 Speaker 1: I think it's important just he has such a good 709 00:40:51,400 --> 00:40:56,520 Speaker 1: handle on on New Hampshire. Uh. His headline is simple, 710 00:40:56,600 --> 00:40:59,560 Speaker 1: Donald Trump has a pass to the presidency. Mr Trump 711 00:40:59,600 --> 00:41:02,520 Speaker 1: one new I'm sure by more than expected. Mrs Clinton 712 00:41:02,640 --> 00:41:06,800 Speaker 1: lost by more than expected. The establishment in Washington is reeling. 713 00:41:07,800 --> 00:41:10,600 Speaker 1: Financial markets have other things to worry about now. They 714 00:41:10,640 --> 00:41:13,320 Speaker 1: have to deal with the likelihood of political instability for 715 00:41:13,440 --> 00:41:16,160 Speaker 1: months to come. Clearly, John Tucker, I saw that last 716 00:41:16,280 --> 00:41:19,560 Speaker 1: night in the different reports of people lengthening out their 717 00:41:19,600 --> 00:41:24,279 Speaker 1: timelines of however uh this go? Uh Valier puts of 718 00:41:24,400 --> 00:41:27,960 Speaker 1: Trump presidency or path to the presidency. I should say 719 00:41:28,120 --> 00:41:31,640 Speaker 1: maybe at chance. He says, Trump is a clear favorite 720 00:41:31,640 --> 00:41:36,319 Speaker 1: to win. Uh. South Carolina on to Share yelling, let 721 00:41:36,320 --> 00:41:39,640 Speaker 1: me get down there. There's more on politics. The markets 722 00:41:39,680 --> 00:41:42,720 Speaker 1: hate uncertainty, Janet yelling today she needs to do two things. 723 00:41:43,080 --> 00:41:47,120 Speaker 1: Convince the markets that the economy isn't remotely close to recession. 724 00:41:47,400 --> 00:41:49,840 Speaker 1: We just heard that from Mr Chandler. She needs to 725 00:41:49,920 --> 00:41:52,520 Speaker 1: convince investors at the FED is in no rush to 726 00:41:52,640 --> 00:41:57,000 Speaker 1: resume it's tightening. And that brings up a really important point, folks. 727 00:41:57,280 --> 00:42:02,040 Speaker 1: The different market actions out there, are they a pseudo 728 00:42:02,040 --> 00:42:05,239 Speaker 1: tightening pushing against the Fed even at the FED? John 729 00:42:05,280 --> 00:42:08,479 Speaker 1: Tucker raised once twice, So how many times they raise 730 00:42:09,000 --> 00:42:13,200 Speaker 1: our market actions tightening up the system, even as the 731 00:42:13,200 --> 00:42:16,080 Speaker 1: FED raises right, So that's one of the ideas maybe 732 00:42:16,080 --> 00:42:18,840 Speaker 1: she'll touch upon today. As sharp note from Greg Valier 733 00:42:19,200 --> 00:42:24,080 Speaker 1: at Horizon Investments that we thank him for his continued perspective. 734 00:42:24,120 --> 00:42:26,399 Speaker 1: Now you think you're going out of topics to talk 735 00:42:26,440 --> 00:42:28,840 Speaker 1: about anything else, Now it is. We're talking about that 736 00:42:28,960 --> 00:42:32,840 Speaker 1: last night her worship and I and and I have 737 00:42:33,040 --> 00:42:38,040 Speaker 1: to admit it is. It is extraordinary. The number of 738 00:42:38,080 --> 00:42:43,680 Speaker 1: themes futures up twenty two, not bad, doubt features up 739 00:42:43,719 --> 00:42:47,840 Speaker 1: one fifty, curve steepening ever so slightly. Stay with us 740 00:42:47,880 --> 00:42:49,759 Speaker 1: another hour of Bloomberg surveillance