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Speaker 1: Broadcasting Live to New York, Bomber to Washington, d C,

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Speaker 1: bloom to Boston, Bloomberg twelve unders to San Francisco, Bloomberg

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Speaker 1: to the Country, Series General one ninety and around the

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Speaker 1: globe the Bloomberg Radio Plus Happen Bloomberg dot Com. This

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Speaker 1: is Bloomberk Surveillance. Hey thirty on Wall Street. I'm Michael

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Speaker 1: McKee along with Francine la Quay. She is with us

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Speaker 1: from our London studios. Today. Economic indicators brought to you

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Speaker 1: by Commonwealth Financial Network. When it's time to change the conversation,

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Speaker 1: talk with the broker dealer r I A that's ready

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Speaker 1: listed called eight six six two three six, or visit

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Speaker 1: commonth dot com to learn more. Not a lot of

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Speaker 1: numbers out this morning, just ahead of the Fed rate decision,

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Speaker 1: but we do have the advanced Trade balance relatively new

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Speaker 1: number of the Converse Department now puts out a monthly

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Speaker 1: trade figure that will add up, uh they hope to

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Speaker 1: the quarterly numbers. They will be adjusted and it comes

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Speaker 1: in much smaller than forecast. The trade deficit was forecast

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Speaker 1: to be virtually unchanged at a negative sixty two point

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Speaker 1: eight billion dollars for March. Instead, it's negative fifty six

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Speaker 1: point nine billion uh fifty six point nine billion dollar

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Speaker 1: trade deficit, which may have something to do with the

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Speaker 1: fact that the dollar got weaker over the last couple

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Speaker 1: of months, not stronger. Oscar Gonzalez is an economisted manual

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Speaker 1: life asset management and he joins us now from Boston. Oscar,

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Speaker 1: is this the kind of thing that would make the

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Speaker 1: FED look feel better because they've been warning and warning

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Speaker 1: and warning about the dollars impact on the economy, but

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Speaker 1: it doesn't show up here. That's correct. I think, in

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Speaker 1: fact that you will have a lot of forecasters, forecasters

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Speaker 1: quite busy this morning revising the FEI from GDP in

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Speaker 1: the first quarter up easily by another two to three pans.

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Speaker 1: But percent, I would given the numbers that you are

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Speaker 1: suggesting here. Um so, I I think that that's clearly

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Speaker 1: one of the elements that he is going into the

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Speaker 1: decision that they will be taking today. Um yeah, I

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Speaker 1: mean at the end of the day. And I think

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Speaker 1: that really what definitial markets are are waiting to see

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Speaker 1: is how this gets uh um explained in the statement

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Speaker 1: that they will be putting out that later today. Clearly,

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Speaker 1: so you think Okay, so you think that actually the

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Speaker 1: strong dollar for the moment hasn't heard us PLC too much.

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Speaker 1: But actually there must be an adequate level for your

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Speaker 1: dollar or a dollar basket against other currencies, which urges

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Speaker 1: CEOs to spend more, and at the moment we're just

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Speaker 1: not seeing. It must hurt confidence at some level. Well,

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Speaker 1: it's certainly the fact that the dollar really had spiked

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Speaker 1: the by idea end of last year and in the

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Speaker 1: beginning of the year, UM was an element that was

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Speaker 1: some concern because really, what's going to hit the exports? UM.

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Speaker 1: But I would think then we have seen that the

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Speaker 1: dollar has in fact and UH lose a bit of

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Speaker 1: the that's weaken in a little bit, so that should

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Speaker 1: provide a little bit more of UH a base for

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Speaker 1: uh uh growth in the US, which is really what

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Speaker 1: they want to see. At the same time, the element

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Speaker 1: of the transmission mechanism coming through a stronger dollar, which

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Speaker 1: was weakening the prospects for inflation, our goal would have

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Speaker 1: to be going in the opposite direction, not that I

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Speaker 1: thought was really big, but certainly it's it's an element

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Speaker 1: that would support their case that inflation will start to

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Speaker 1: pick up in int for the balance of the year, Well,

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Speaker 1: what happens to the dollar going forward? A lot of

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Speaker 1: stragers say the dollars should get strong where the Fed's

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Speaker 1: expected to continue raising rates on an interest rate differential basis,

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Speaker 1: that only makes sense. And yet when the Fed raise

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Speaker 1: rates in December of the dollar got weaker. Yeah, and

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Speaker 1: I think that's something that we have seen that is

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Speaker 1: UH country with most economic model livers will be um

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Speaker 1: telling you, I mean that we have seen these similar

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Speaker 1: effects in Japan where you you really continue to lower

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Speaker 1: rates and and and instead of seeing a weekending of

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Speaker 1: the end, you have seen strengthen over the of the end.

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Speaker 1: So I think there is really a we are going

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Speaker 1: through a period where the the traditional transmission mechanisms and

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Speaker 1: the structures of economy are not really the way the

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Speaker 1: textbooks will be tell you uh. And so I think

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Speaker 1: that is clearly something that is happening right now. There

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Speaker 1: is quite a bit of uh a uncertainty as to

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Speaker 1: where we are going to uh the dollar is going

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Speaker 1: to go. But I think in general, UM, when when

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Speaker 1: we look at back at what a forecast just looking

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Speaker 1: at at the end of last year was really further

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Speaker 1: the strengthening of the dollar, UM and you can see

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Speaker 1: that that was totally the opposite that ness really happened. UM.

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Speaker 1: So I think we have to be very careful us

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Speaker 1: to uh make more predictions about the continue um a

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Speaker 1: strengthen of the dollar. When he said we have seen

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Speaker 1: a fairly uh weakening. Do you think do you think

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Speaker 1: that because of so these figures today, because in general

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Speaker 1: we haven't really seen this dollar hike bite anything, and

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Speaker 1: because you believe GDP will be revised forwards or will

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Speaker 1: be revised high, or do you think that the Fed

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Speaker 1: will move in June with a great hike. I think

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Speaker 1: that it is. It's quite important to see how they

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Speaker 1: structured the statement. But I think uh, um, at this point,

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Speaker 1: I would think that they will be preparing the markets uh.

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Speaker 1: And we're preparing uh really all um, people really looking

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Speaker 1: over their their their statements to really open up and

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Speaker 1: making this move a little bit more clear. UM. I

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Speaker 1: don't think as as usual is not something that they

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Speaker 1: will be cornering themselves as to committing themselves to make

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Speaker 1: it move in June, but certainly making a little bit

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Speaker 1: more transparent that things are going in the direction um

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Speaker 1: that they were hoping to see and and as a result,

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Speaker 1: a couple of moves, a couple of rate hikes are

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Speaker 1: are in order and to make them in June or

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Speaker 1: for the other um for meetings for the balance of

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Speaker 1: the year are probably what they are hoping to see

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Speaker 1: so that to re balance the realign their rate projectories

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Speaker 1: that we see, um, what the market I see and

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Speaker 1: what they are really really a kidding critical Okay. Oscar

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Speaker 1: Gonzalez is with this season economist Manu Life Asset Management.

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Speaker 1: We're talking about the FED and the economy ahead of

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Speaker 1: today's meeting two o'clock this afternoon. We'll have full coverage

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Speaker 1: cheron Bloomberg Radio. This hour of Surrellance. Meanwhile, brought to

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Speaker 1: you by Westchester Subaru is at west Chester Subaru dot com.

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Speaker 1: Here's like a bar with the latest world of national headlines.

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Speaker 1: Michael Milke, thank you very much. Donald Trump has strengthened

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Speaker 1: his grip on the Republican presidential race. Trump had a

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Speaker 1: clean sweeping all five primaries and Delaware, Pennsylvania, Connecticut, Maryland,

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Speaker 1: and Rhode Island yesterday. Trump is headed to Indiana today

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Speaker 1: after first delivering of foreign policy speech in Washington. Meanwhile,

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Speaker 1: Democrat Hillary Clinton is nine of the way to her

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Speaker 1: party's nomination, having won four out of five Northeast primaries.

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Speaker 1: Bernie Sanders went in Rhode Island. Former House Speaker Dennis

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Speaker 1: Hastard is schedule to be sentenced today in a hush

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Speaker 1: money case. Hastard is accused of molesting boys while was

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Speaker 1: a high school wrestling coach. To Lean. Burge says her brother,

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Speaker 1: who died years ago, was one of Hastrid's victims. Bird

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Speaker 1: says she will be there for the sentencing. He'll be

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Speaker 1: there with me. He has been with me this whole time.

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Speaker 1: He has walked me through twenty year. He's with me.

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Speaker 1: It is so hot in Thailand that the animals at

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Speaker 1: Bangkok Zoo are being fed special frozen fruit pops. April

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Speaker 1: in Thailand is usually hot, but this year temperatures have

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Speaker 1: been as high as one hundred eleven point seven degrees,

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Speaker 1: just short of an all time record. Global News twenty

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Speaker 1: four hours a day, powered by our twenty four hundred

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Speaker 1: journalists more than a hundred fifty news bureaus from around

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Speaker 1: the world. I'm Michael bar Mike, thank you, Welcome time

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Speaker 1: now for the Bloomberg NBC Sports update. Here's Jones Tesha.

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Speaker 1: Thanks Mike, Mets two and five start has been long

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Speaker 1: forgotten their ten and two since they meet Cincinnati four

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Speaker 1: to three. Is Uns. Says for us, came off the bench,

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Speaker 1: felt at a three run pinch at home run to

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Speaker 1: tie the game. David Right to RBI single later in

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Speaker 1: the seventh put them ahead. Went from you know, one

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Speaker 1: of those games where you know, we just didn't have

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Speaker 1: a lot going for us to you know, within a

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Speaker 1: couple of minutes, all of a sudden, you know we

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Speaker 1: got some things cooking and uh, some guys on base

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Speaker 1: with with with sas coming up, so um, yeah, fairly

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Speaker 1: quickly turn of events. In Washington lost to the Phillies

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Speaker 1: Mets or two games out of first, Yankees are still

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Speaker 1: in the last. They lost ten Juanna, Texas Rangers scored

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Speaker 1: in six of their eight innings, including six and the

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Speaker 1: third off and against shaky Luis Savarino. Joe Girardi on him.

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Speaker 1: He was up with his fast faults in the festivals

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Speaker 1: that the hit between the tie and the waist, and

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Speaker 1: he had a hard time to throwing his off speed

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Speaker 1: for strikes. So it kind of put him in a

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Speaker 1: in a tough situation and they definitely took advantage of

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Speaker 1: also Pittsburgh one nine for a Colorado. Andrew McCutchen had

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Speaker 1: two home runs over the Pirates first twenty games. He

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Speaker 1: hit three homers. Last night, NBA Playoffs was looking like

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Speaker 1: overtime between Indiana and Toronto and the Pacers. Solomon Hill's

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Speaker 1: not good three point at the end, but by an

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Speaker 1: eye lash it was after the buzz or Raptors with

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Speaker 1: a come back one for a three two series lead

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Speaker 1: at Lanta eat Boston three, Hawks lead three to two.

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Speaker 1: The Islanders have their Game one at Tampa Bay tonight.

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Speaker 1: Winston Hill has died at the age of seventy four.

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Speaker 1: One of the greatest Jets ever. Four time Pro Bowl tackle.

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Speaker 1: Hill help the Jets when the Super Bowl three with

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Speaker 1: the Bloomberg NBC Sports Update, I'm John stag danl jons

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Speaker 1: hash Ower, Thank you very much. Well, we are watching

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Speaker 1: the market's head of the FED decision. Better news today.

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Speaker 1: The trade defficent much smaller than forecast, and you think

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Speaker 1: that might have an impact on the Fed. Maybe it

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Speaker 1: would have an impact on the markets, but everything kind

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Speaker 1: of frozen while we wait for Yelling and Company to

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Speaker 1: decide the tenure note yield one point nine percent been

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Speaker 1: that way all morning, saying story across the curve. The

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Speaker 1: five year one point three seven eighty five basis points

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Speaker 1: for your two year s and p futures down six

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Speaker 1: points three tenths. Stock six hundred in Europe is up

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Speaker 1: a point two tenths. This is Bloomberg Radio. Bloomberg Surveillance

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Speaker 1: and I'm car at Moscow. This update is brought to

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Speaker 1: d R dot org. Watching some headlines crossing the Bloomberg

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Speaker 1: right now. Marvel Technology is in a pact with Starboard Value,

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Speaker 1: which owns six and a half percent of Marvel Technology.

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Speaker 1: Starboard will nominate three people to its board immediately and

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Speaker 1: at a fourth member as soon as possible again that

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Speaker 1: just crossing the Bloomberg. Treasuries meanwhile are rising, setting ten

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Speaker 1: year yields lower for the first time in five days,

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Speaker 1: and the dollar is weakening. His markets signaled caution before

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Speaker 1: the federal reserves the latest interest rate decision. Nasdaq one

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Speaker 1: hundred index futures are slumping. Is Apple tumbled after posting

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Speaker 1: its first quarterly revenue drop in more than a decade.

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Speaker 1: We checked the markets every fifteen minutes throughout the trading

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Speaker 1: day on Voloomberg and SMP EVENI futures are down six points,

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Speaker 1: DOWI mini futures down forty two, Nasdaq eveny futures down

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Speaker 1: forty eight. The decks in Germany's up four tenths per cent.

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Speaker 1: Ten year treasury up eight thirty seconds, the yield one

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Speaker 1: point eight nine percent. They yield on a two year

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Speaker 1: point eight four percent. Nam X scrude oil up one

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Speaker 1: point nine percent or eighty two cents, to forty four

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Speaker 1: eighties six of barrel COMEX school There's up seven tenths

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Speaker 1: percent or eight dollars sixty cents at twelve fifty two.

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Speaker 1: Announced the euro An ollar thirteen sixteen, the yen one

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Speaker 1: eleven point to zero and Mono Lie International, the maker

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Speaker 1: of Rich Crackers and Oreo Cookies, posting first quarter earnings

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Speaker 1: that beat analysts estimates. And that's a Bloomberg business for

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Speaker 1: Ash Francine and Mike Cara Moscow, Thank you very much

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Speaker 1: on Wall Street. The following is from Bloomberg View. Opinions

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Speaker 1: and commentary from Bloomberg columnists. I'm Paula Dwyer and editor

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Speaker 1: with Bloomberg View. The federal disability program is a mess.

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Speaker 1: It almost went broke until Congress gave it emergency funds

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Speaker 1: last fall. It discourages employment, and it can be gained,

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Speaker 1: but woe to the office seeker who tries to fix it.

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Speaker 1: No one understands this better than Donald Trump, who opposes

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Speaker 1: cuts to entitlements, including the one fifty billion dollar disability program,

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Speaker 1: on which eleven million Americans depend almost twice Recipients are

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Speaker 1: mostly non college educated, white, blue collar, and middle aged

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Speaker 1: Trump voters. In other words, of the twenty states with

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Speaker 1: the highest number on disability, fourteen chose Trump in primary.

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Speaker 1: So far three have yet to vote, but he's ahead

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Speaker 1: or tied in them all. Disability has become like welfare

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Speaker 1: for jobs. Blue collar workers in the Southeast Appalachia and

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Speaker 1: pockets of the Northeast and Midwest where industries have moved

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Speaker 1: offshore or closed down over the last few decades. These

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Speaker 1: areas also have declining life expectancies. When you combine failing

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Speaker 1: health with the falling fortunes of the poorly educated, you

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Speaker 1: get high rates of substance abuse and physical and mental impairment.

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Speaker 1: Trump provides an outlet for their anger by blaming immigrants

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Speaker 1: and open trade. Congress has a few years to fix

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Speaker 1: the disability fund. What lawmakers really need is an economic

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Speaker 1: plan for these areas. Until then, people will cling to

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Speaker 1: the disability life raft and to demagogues like Trump. I'm

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Speaker 1: followed wire an editor with Bloomberg View. For more Bloomberg commentary,

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Speaker 1: please go to Bloomberg View dot com or view go

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Speaker 1: on the Bloomberg terminal. This has been Bloomberg View. Bloomberg

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Speaker 1: View commentaries can be heard hourly weekdays on Bloomberg Radio. Mike,

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Speaker 1: we need to talk more little bit about central banks,

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Speaker 1: but also the o J. Let's get back to our guest.

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Speaker 1: He's Oscar Gonzalez, an econverst at manual Life Asset Management.

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Speaker 1: To Oscar, we were talking a little bit before about

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Speaker 1: the f MC, the challenges that Cherry Yellen has talked

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Speaker 1: to me about bo J. I spoke to Bill Winter's,

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Speaker 1: the CEO of Standard Chargers, and he was telling me

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Speaker 1: his biggest concern is that we have this cumulative effect

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Speaker 1: of extraordinary monetary stimulus which will create bubble. Is this

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Speaker 1: the bubbles? Is this what the b o J is doing? UM? Well,

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Speaker 1: I think there is quite a bit of the date

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Speaker 1: about that. UM. Clearly, the u J has been partially

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Speaker 1: successful at stimulating their economy, although the at the time

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Speaker 1: it's very clear that not all the transmission mechanisms are

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Speaker 1: up to part I think the real issue in Japan

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Speaker 1: is that the lending and consumilar part of the economy

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Speaker 1: is not really working to the at at the speed

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Speaker 1: that the bo J. Really It's like UM. They can

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Speaker 1: be obviously successful bringing down the whole deal terms of

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Speaker 1: making because of cat uh uh lower because of capital.

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Speaker 1: At the same time we can see that it is

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Speaker 1: creating all kinds of disscations as well. UM. They the

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Speaker 1: consumers are pulling back, which is not really what the

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Speaker 1: intention of the policy is. UM. And the the fact

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Speaker 1: that you may want to reach for higher UM fields

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Speaker 1: not only in Japan, but somewhere else are starting to

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Speaker 1: to create some sort of a mini bubbles in here

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Speaker 1: that I think the Bank of Japan should be very

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Speaker 1: concerned about. I don't think it's uh, this main concern

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Speaker 1: at this point because clearly the main concern is what's

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Speaker 1: going to happen. But they can continue stimulating their economy,

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Speaker 1: um and and worried about the potential board a pain

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Speaker 1: bobble in in in an asceticate we're wrong, but it's

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Speaker 1: certainly something that is in there they are taken into

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Speaker 1: account that should be very careful about. At one time,

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Speaker 1: Japan was everybody's buggyman. Now but you gotta wonder how

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Speaker 1: much impact does Japan, what the Bank of Japan and

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Speaker 1: what the Japanese economy does have on the United States,

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Speaker 1: on the Eurozone, the rest of the world. Correct. I

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Speaker 1: think if anything, um, everybody is looking at that the

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Speaker 1: lessons that that we can learn and apply somewhere else

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Speaker 1: as how a Japan And I think that is one

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Speaker 1: of the the concerns us to the limits of monetary policy,

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Speaker 1: just uh, you really need to have a more of

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Speaker 1: a effective transmission mechanisms. Were in fact increase in demand

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Speaker 1: coming from consumers and businesses actually going out and risking UM,

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Speaker 1: risking in the say, in the take take take on

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Speaker 1: risk in the sense that they will go out and

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Speaker 1: and lend and and provide the sort of activity UM

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Speaker 1: that eventually will create a faster, faster growth and I'm

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Speaker 1: reflation and that is not really what pasting in Japan.

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Speaker 1: So we still what is exactly the lesson that the

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Speaker 1: FEND can learn from b O J don't do negative

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Speaker 1: rates and certainly do not do helicopter money. Well, I

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Speaker 1: don't think we are at that point yet, but certainly

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Speaker 1: UM there the defend is very UHM. It's very conscious

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Speaker 1: that a month or policy along has its limits, and

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Speaker 1: I mean it's very clear that they have a yelling

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Speaker 1: in the past that's been UM asking for uh. I

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Speaker 1: don't know why we don't do it obviously if there

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Speaker 1: is a political dimension to this, but certainly there is

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Speaker 1: more to UM monitor to economic policy. That good help

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Speaker 1: is UM get out of a period where we have

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Speaker 1: very slow growth, that we have a dangers soulacier and

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Speaker 1: in this case should be increasing in pistol policy should

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Speaker 1: have the support of pistol policy as well as monitored policy.

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Speaker 1: One alone kind not really do the job. But we're

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Speaker 1: not getting fiscal policy. That's the problem. And then the

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Speaker 1: question becomes do central banks our central banks forced into

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Speaker 1: doing additional monetary policy because they're the only game in town.

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Speaker 1: And then it just makes it harder, as you say,

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Speaker 1: to get out of that circle correct And I think

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Speaker 1: that's something that hopefully we could correct in the future,

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Speaker 1: but it's something that has been happened for the last

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Speaker 1: few years unfortunately, but it is a I think it's

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Speaker 1: a lesson that we can learn from from Japan as well.

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Speaker 1: UM that we really need to have the other hand

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Speaker 1: really helping and supporting economic growth. Well, do you buy

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Speaker 1: the idea of people are talking about that if the

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Speaker 1: FED and by extension the other central banks would get

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Speaker 1: out of the way, that would stimulate growth now more

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Speaker 1: than additional monetary policy action. UM, I don't. I don't

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Speaker 1: buy it completely. I think that a monetary policy is

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Speaker 1: still needed. At the same time, I think the gradual

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Speaker 1: um the graduation approach that we see in Defend probably

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Speaker 1: would help us um to keep some credibility and and

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Speaker 1: everything fact we see at growth that's starting to to

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Speaker 1: to be sustained. I think that would land a little

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Speaker 1: with a credibility to the argument that you don't make it.

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Speaker 1: But otherwise I think until we see that what we

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Speaker 1: have seen so far is that without the simple banks help,

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Speaker 1: I think we would be a much more shape than

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Speaker 1: that we are. That's not to say that there are

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Speaker 1: other issues and other problems that have been created by

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Speaker 1: lowering the interest rates to the levels that we have

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Speaker 1: seen that even into negative turtur um. Clearly this carefully

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Speaker 1: in a situation where we are, and I think this

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Speaker 1: is this is an argument that we're starting to see

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Speaker 1: right now, is that the we are, we are entering

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Speaker 1: a period we're lower lowering the interest rates in fact

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Speaker 1: creates a situation in the inflation and environment where um,

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Speaker 1: it would be very hard to come out of race.

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Speaker 1: And we'll do what we got to say. Interfact asking

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Speaker 1: Gonzalas and kind of said manual ie Fasset management, thanks

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Speaker 1: for being with us this morning here on surveillor. It's

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Speaker 1: ahead of the FED. US features are lower, bond prices

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Speaker 1: a little bit higher, and in Japan the Nike was

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Speaker 1: down sixty three points today while the en gets a

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Speaker 1: little bit stronger one eleven eighteen. Definitely not the direction

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Speaker 1: that coronas on would like them to go. We'll have

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Speaker 1: full coverage of today's FED decision. The FED decides two

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Speaker 1: PM this afternoon. Scarlet Fou, Joe Wisenthal, and me here

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Speaker 1: on Bloomberg Radio worldwide