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Speaker 1: Broadcasting live to New York, Croomberg eleventh to Washington v

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Speaker 1: c Ruenberg nin and I'm work She'll Boston Bloomberg twelve

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Speaker 1: hunder San Francisco Bloomberg n to the country suius XAM

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Speaker 1: Channel one nineteen and around the globe the Bloomberg Radio

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Speaker 1: Plus Appen Bloomberg dot com. This is Bloomberg Surveillance and

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Speaker 1: good morning. I'm Karen Moscow along with Tom Keene and

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Speaker 1: Michael McKee and the opening deal brought to you by

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Speaker 1: s C I Imagine, a global operating platform designed to

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Speaker 1: deliver a differentiated and technologically rich investor experience. Find out

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Speaker 1: how see I can help you succeed at se i

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Speaker 1: C dot com slash imagine stocks lower at the open,

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Speaker 1: the S and P five hundred down a tenth of

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Speaker 1: upper center, two points to seven down, Jones Industrial Average

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Speaker 1: down a tenth of upper center, twenty two points to

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Speaker 1: seventeen thousand, five hundred sixty nastacs down to tenths per

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Speaker 1: cent or eight points to forty eight thirteen ten. Your

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Speaker 1: treasury of four thirty seconds, the yield one nine two

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Speaker 1: per cent yield, the two year, point eight eight percent

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Speaker 1: non ex screwed oil down two point one percent or

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Speaker 1: eighty eight cents to forty dollars fifty seven cents of

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Speaker 1: barrel comex gold is down two point two percent or

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Speaker 1: twenty seven dollars ninety cents to twelve twenty six an ounce,

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Speaker 1: the euro dollar eight and the N one twelve point

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Speaker 1: seven eight. Tom and Mike Karen, Thanks so much, Tom

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Speaker 1: Keen and Michael McKee. And to continue with perspective follow

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Speaker 1: up in the view forward off of what we heard

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Speaker 1: from James Bullard of St. Louis for thrilled to bring

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Speaker 1: you out of Michigan. David Burson, David Burson of Nationwide.

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Speaker 1: Dr Burson, good morning, Good morning out of Michigan and

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Speaker 1: in Ohio. And in Ohio. I might point out it's

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Speaker 1: just that the pedigrees are important. We had UH Jim

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Speaker 1: Bullard of Indiana. Now you with UH Michigan. I want

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Speaker 1: to draw forward one of the thoughts he talked about,

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Speaker 1: which is the concern is moving too fast. And I

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Speaker 1: didn't get to the question with President Bullard about the

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Speaker 1: word the strange word measured and the idea of a

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Speaker 1: measured pace. This is of course associated with Chairman Greenspan.

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Speaker 1: Did we cause harm by desperately wanting the predictability of

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Speaker 1: a gradualism. I'm not sure that the predictability was the problem.

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Speaker 1: I'm not sure the gradualism was the problem. I think

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Speaker 1: that the lateness of the start was the problem, and

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Speaker 1: and I have a concern that starting too late this

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Speaker 1: time could be a problem. But but gradualism itself is

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Speaker 1: not the problem, because you get back to the hope

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Speaker 1: and prayer of FED. If they fall behind jumps and

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Speaker 1: there's that strange phrase jump condition. Have we have any

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Speaker 1: recent experience of a FED that fell behind and had

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Speaker 1: to jump quickly? Well, I think you could make an

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Speaker 1: argument that in the last business cycle, um, the one

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Speaker 1: before the Great Recession, that the FED tightened too late,

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Speaker 1: That that the FED kept interest rate at what were

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Speaker 1: then rock bottom levels for for too long, and that

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Speaker 1: meant that the FED had to tighten too much and

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Speaker 1: and and too quickly at the end. And you know,

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Speaker 1: it was the proximate cause of the Great Recession. Many

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Speaker 1: other things made the Great Recession much worse, certainly the

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Speaker 1: mortgage market did, But but I think that the FED

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Speaker 1: having to tighten too much at the end was what

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Speaker 1: tipped the economy into recession. David Person with us. He

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Speaker 1: is with Nationwide UH, and we love to have him

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Speaker 1: on with the really impulse of the nation. We we

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Speaker 1: we have not talked about housing enough. We've been remiss

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Speaker 1: on that. David, give us an update. It's a smaller

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Speaker 1: housing market is part of our economy, isn't it. Well.

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Speaker 1: Certainly home sales and housing starts are are less of

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Speaker 1: the economy now than they were the last expansion. But

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Speaker 1: you can certainly make the case that housing was too

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Speaker 1: big in the economy, too too important in the economy

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Speaker 1: before the Great Recession, lots of people buying why to

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Speaker 1: homes where they couldn't really afford them. I think now

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Speaker 1: we're seeing a more sustainable rise in the housing market.

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Speaker 1: And you know what, will housing goes up month a month.

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Speaker 1: It's affected by a lot of things, including weather. The

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Speaker 1: trend is clearly upward, and I think that we will

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Speaker 1: continue to see the trend upward, but at a more

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Speaker 1: sustainable pace for housing. And it's unlikely that it's going

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Speaker 1: to be housing that brings this expansion to an end.

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Speaker 1: What does Nationwide know about the availability of credit. It's

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Speaker 1: not our number one mail, but it's number three or

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Speaker 1: number four, which is when people say it's a normal

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Speaker 1: housing market, our listeners go nuts, well, it a credit

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Speaker 1: availability is tighter than it has been in the past. Again,

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Speaker 1: clearly before the Great Recession it was way too easy.

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Speaker 1: We're not saying that we ought to go back to that,

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Speaker 1: but credit availability is tighter now. Credit is tighter now,

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Speaker 1: it is less available than it was, and I think

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Speaker 1: that's along with just fewer homes on the market. That

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Speaker 1: is one of the key reasons why housing is growing

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Speaker 1: more slow leave this time. If credit were more easily available,

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Speaker 1: we see more home sales. You know, it's hard to

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Speaker 1: know when credit is exactly right. And I guess if

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Speaker 1: you had a choice between credit being a little too

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Speaker 1: tight and a little too easy, we're probably better off

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Speaker 1: with being a little too tight, but we'd probably rather

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Speaker 1: have it be exactly right now. David Person with US

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Speaker 1: will continue this discussion and focus on the housing market

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Speaker 1: and of course other aspects of consumption America. David Person

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Speaker 1: is Chief Economists with Nationwide. To give you a data

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Speaker 1: check here before we get to our look at the

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Speaker 1: equity markets, negative thirty five on the dalloas and B

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Speaker 1: down four points. VIX higher as you would expect point

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Speaker 1: three six points fourteen point five three. I'm gonna attribute

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Speaker 1: some of that to James Bullard's comments, maybe some dissension

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Speaker 1: with the plots in the FED. Yeah, I think there

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Speaker 1: was a little bit of a nudge there. I wanted

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Speaker 1: to look at the two year yield, which hasn't moved

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Speaker 1: all that much, but there's a list a general weight

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Speaker 1: to the tape, and what I will say is I

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Speaker 1: don't want to associate any market dynamics to Brussels. We

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Speaker 1: looked at that carefully. Certainly we saw that was Sterling

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Speaker 1: as a follow on to Brexit debate. Sterling weaker further

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Speaker 1: today one four Let me get up here quickly the

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Speaker 1: um Sterling chart before we go to David Wilson. The

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Speaker 1: loaf for the day and Sterling, well, it just spiked down.

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Speaker 1: I stand corrected the low, so still sterling weakness maybe?

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Speaker 1: Is the other market news here over the last forty

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Speaker 1: eight hours on the equity markets with a list of winners, losers,

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Speaker 1: Dogs of the Dow David Wilson, is there a dog

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Speaker 1: of the Dow today? Uh? Nike would be your dog

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Speaker 1: of the Dow? Looking at stock performance because the shares

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Speaker 1: at the moment or down four percent. The world's largest

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Speaker 1: sporting goods maker expects fiscal year earnings and sales to

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Speaker 1: grow more slowly than analysts do based on the average

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Speaker 1: estimates in the Blueberg survey. Nike's outlook reflects growing competition

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Speaker 1: from under Armour and a stronger dollar. Another stock taking

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Speaker 1: a hit, gill Lead Science, is down about two percent.

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Speaker 1: The drug maker may have to pay as much as

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Speaker 1: two billion dollars in damages plus royalties on its biggest sellers,

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Speaker 1: the hepside of C treatment Sivaldi and harbony. A California

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Speaker 1: journey jury yesterday ruled against Gilead in a patent dispute

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Speaker 1: brought by Murk and I Honest Pharmaceuticals. Mark shares up

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Speaker 1: half a percent at the moment, I Honest with a

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Speaker 1: six percent gain. General Mills down half a percent. The

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Speaker 1: food maker's fiscal third quarter sales were at the low

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Speaker 1: end of analyst projections. Revenue was hurt by five percent

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Speaker 1: drop in sales volume. Gold mining stocks are lower after

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Speaker 1: the precious medals price dropped by more than twenty dollars

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Speaker 1: announced in New York trading. Barrack Gold down more than

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Speaker 1: five percent of the stock cut the hole from by

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Speaker 1: Deutsche Bank and Newmont Mining with a loss of almost

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Speaker 1: five percent. Yeah, it's back to Nike. That David in

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Speaker 1: the time we've got left, three m is six point

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Speaker 1: four percent of the doubt. I did not know that.

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Speaker 1: You have to remember that the Dow was what they

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Speaker 1: call a price weighted index, so basically it comes down

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Speaker 1: to what the share price Lloyd boyd Lloyd Blank find

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Speaker 1: is six percent of the doubt. I did not know that.

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Speaker 1: There you go. It's all about, you know, the higher

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Speaker 1: the share price, uh, the higher the waiting in the

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Speaker 1: Dow as opposed to the standard Force five hundred, which

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Speaker 1: is a market value weighted index. So it takes things

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Speaker 1: into account, like the size of the company of the

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Speaker 1: Dow was four stocks because of this massive skew not unusual.

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Speaker 1: This is why pros like you use SPX even though

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Speaker 1: we always quote the doll like we know what we're

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Speaker 1: talking about. One more stock quickly, all right, I'll give

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Speaker 1: you two quickly. That would be UH senteen and health Net,

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Speaker 1: which both of about three and a half percent. The

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Speaker 1: Health Insurance received clearance from California regular regulators for their

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Speaker 1: five billion dollar deal. They expect to complete it in

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Speaker 1: the next few days. California. Mama's Health Net is based

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Speaker 1: in the Los Angeles suburb of Woodland Hills. David Wilson,

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Speaker 1: thank you so much, greatly appreciated. Always every time I

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Speaker 1: swear Dave it. Wilson comes in. He parachutes down from

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Speaker 1: the top of the building into our courtyard in atrium,

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Speaker 1: comes up here with his parachute. I always learned something

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Speaker 1: with David Wilson. The Dow negative forty four points and

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Speaker 1: he's Wall Street. There's hours surveillance being brought to you

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Speaker 1: by Masted White Planes. Visit Monsted. White Planes dot Com

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Speaker 1: is from around the world. Here's Michael barn John Tom,

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Speaker 1: thank you very much. Today Bell Jim held a moment

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Speaker 1: of silence in the country. Will have three days of

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Speaker 1: national morning after yesterday's Tibor attacks in Belgium killed thirty

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Speaker 1: four people and wounded about two d others. Officials say

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Speaker 1: Brussels Main airport will remain closed until at least tomorrow night.

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Speaker 1: Two blasts went off at the international airport and another

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Speaker 1: at a subway station. Belgium police continue to search for

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Speaker 1: a man seen in a photo from airport surveillance walking

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Speaker 1: with two men believed to be the suicide bombers. Prosecutor

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Speaker 1: Frederick Van Leeu, through a translator, says following police raids,

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Speaker 1: a suspect has been arrested, but not the third man

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Speaker 1: believed to be on surveillance video at the airport. Afort

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Speaker 1: research have been carried out in Skarbek last night. One

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Speaker 1: person had been arrested and it's undergoing interrogations by the prosecutor.

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Speaker 1: Former rival Jeff Bush says he's endorsing Ted Cruz for president.

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Speaker 1: Yesterday Cruise one of the Utah Republican caucuses Donald Trump

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Speaker 1: and Hillary Clinton one in Arizona. Clinton's Democratic rival, Bernie

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Speaker 1: Sanders went in Utah and Idaho. Global News twenty four

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Speaker 1: hours a day, powered by our journalists more than a

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Speaker 1: hundred fifty news bureaus from around the world on Michael

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Speaker 1: bar Tom and Michael, thank you so much, folks. We

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Speaker 1: will have about our complete James Bullard interview across all

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Speaker 1: of our surveillance social It was the most nuanced, interesting

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Speaker 1: conversation with the president of the St. Louis fed from

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Speaker 1: New York City Bloomberg Surveillance bloom As being glunt you

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Speaker 1: by on Tucket. Thank your shirt is too long to

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Speaker 1: wear on Tucked, it probably is on Ticket has solved this,

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Speaker 1: making shure it's design to be weren't on tuck. Visit

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Speaker 1: on tucket dot com. Use the code w BBR for

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Speaker 1: off Global Business News twenty four hours a day at

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Speaker 1: Bloomberg dot com the Radio plus Mobile Act and on

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Speaker 1: your radio is a Bloomberg Business Flash And I'm Karin Moscow.

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Speaker 1: They ought they brought to you by National Realty Returns

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Speaker 1: on Cash and rented real Estate. Find them at n

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Speaker 1: r I a dot net. At a Reserve Bank of

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Speaker 1: Saint Louis, President James Bueller had said he is getting

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Speaker 1: increasingly concerned about giving forward guidance through projections of how

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Speaker 1: fast interest rates will rise, also referred to as the

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Speaker 1: dot plot. To wonder about the efficacy of the dot

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Speaker 1: plot on the policy rate part, because we're, you know,

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Speaker 1: implicitly giving some kind of forward guidance through that dot plot,

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Speaker 1: and I'm wondering whether that's counterproductive at this point. And

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Speaker 1: Butler made the comments in an interview with Tom Keene

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Speaker 1: and Michael McKee heard on Bloomberg Radio and television. Billard

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Speaker 1: also set a decline in joblessness below the natural rank

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Speaker 1: may force policy makers to raise rates faster in the future.

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Speaker 1: investors await more data for clues on the economy and

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Speaker 1: direction of monetary policy. To check the markets every fifteen

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Speaker 1: minutes throughout the trading day. On Bloomberg S and P

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Speaker 1: five hundred down a quarter percent or five points to

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Speaker 1: forty four down, Jones Industrial average down a quarter percent

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Speaker 1: or forty one points to seventeen thousand, five hundred forty

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Speaker 1: and asdacts down a third of a percent or sixteen

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Speaker 1: points to forty eight oh four. The ten year Treasury

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Speaker 1: up five thirty seconds, the yield one point nine two percent,

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Speaker 1: yield on the two year point eight eight percent. Nimex

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Speaker 1: Gold is down two point four percent or thirty dollars

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Speaker 1: fifty cents. At twelve eighteen ten announced the euro a

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Speaker 1: dollar eleven eighty nine, the n one twelve point seven six,

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Speaker 1: and that's a Bloomberg business. Karen, thank you so much.

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Speaker 1: We surprised with David Berson of Nationwide. David I don't

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Speaker 1: want to catch you unawares. I'm gonna do a little

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Speaker 1: bit of the background here, but I'm sure you're more

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Speaker 1: than capable of diving in. James Bullard has been making

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Speaker 1: a lot of Irving Fisher eighteen sixty seven, two years

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Speaker 1: after the end of the Civil War. He lived in

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Speaker 1: wonderful life to nineteen uh seven. He was hugely visible

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Speaker 1: to put things in perspective. A name that all of

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Speaker 1: you know, Joseph Schumpeter. We talked about creative des destruction.

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Speaker 1: Chumpeter of Harvard called Fisher quote the greatest economists the

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Speaker 1: United States has ever produced. That was, of course of

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Speaker 1: a a different generation. When you have James Tobin of

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Speaker 1: Yale and Milton Friedman of Chicago agreed. That shows you

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Speaker 1: the impact of Irving Fisher. So Dr Burson we of

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Speaker 1: James Bullard talking about a neo Fisherian moment, which is

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Speaker 1: thinking about the dynamics of real g d P and

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Speaker 1: the dynamics of inflation, which gets you out denominal g

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Speaker 1: d P. What do you make of the permazone of

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Speaker 1: a zero bound, the artificiality we live in, and what

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Speaker 1: it means within a neo Fisherian moment, you know, I

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Speaker 1: think that what what matters most here is Fisher's discussion

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Speaker 1: of debt deflation. UM that UH, when you have lots

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Speaker 1: of debt is as we did during the Great Recession.

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Speaker 1: UM that having to sell assets at distress prices UH

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Speaker 1: causes deflation overall in the economy. And that makes it

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Speaker 1: very difficult for central banks to have a monetary policy

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Speaker 1: that works, because we saw this during the Great Depression,

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Speaker 1: when inflation is negative than real rates are positive and

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Speaker 1: and and you want to have nominal you want to

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Speaker 1: have real interest rates negative to try to boost UH,

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Speaker 1: to boost borrowing and saving. And you know, we haven't

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Speaker 1: seen that. We see a hoarding of money. UM. Now

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Speaker 1: we see nominal interest rates going down, but you know,

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Speaker 1: real interest rates are are are are still positive in

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Speaker 1: a lot of the world. And I think Fisher has

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Speaker 1: a lot to say about this. Fisher is and this

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Speaker 1: is too, folks, a very general statement. Fisher enjoyed simplistic models,

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Speaker 1: where his colleague and crime new Vixel. You'll hear John writing, um,

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Speaker 1: Steve Liesman over at the NBC has done great work

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Speaker 1: on this on Vixcellian economics. Fisher was simple models. Vixel

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Speaker 1: was much more complex analysis of how we get from

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Speaker 1: point A to point B and in doing that, David,

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Speaker 1: is simple better or do we need to maintain the

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Speaker 1: complexity that we see years ago from new Wixel or others? Now?

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Speaker 1: Which is better? You know? Neither isn't currently better? Or

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Speaker 1: what we need is is a theory that actually explains

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Speaker 1: what's going on. And ultimately you have to be able

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Speaker 1: to explain it to people if they don't understand what

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Speaker 1: you're saying, even if the theories correct, Um, you're you're

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Speaker 1: you're not going to be listening to so so simpler explanations,

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Speaker 1: even if complex theories and when what Fisher was talking

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Speaker 1: about we're very complex things. He just expressed them in

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Speaker 1: a simple way. Uh, certainly for policymakers is a much

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Speaker 1: better way to go. Then the mystery is then and this,

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Speaker 1: folks is grandparents and great grandparents time. It was the

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Speaker 1: idea of the search and the frustration over economic growth.

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Speaker 1: It's really no different today, is it, David. As Jeff

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Speaker 1: M l has told me three point two, GDP solves

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Speaker 1: a lot of problems. I think that's exactly right. Um,

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Speaker 1: you know, growth over the last you know, almost ten

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Speaker 1: years of eight years anyway, the expansion of um. You know,

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Speaker 1: two percent growth just isn't enough. We need to be

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Speaker 1: able to get growth back up to three to three

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Speaker 1: and a half percent. That is the single best thing

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Speaker 1: to increase the wages of the average worker in the

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Speaker 1: US and and around the world, as well as the

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Speaker 1: single best way to reduce income inequality. It's hard to

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Speaker 1: reach income inequality if you're not growing, then all you're

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Speaker 1: doing is simply shuffling the deck chairs. You need to

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Speaker 1: float the boat. Yeah, it would be permanently wrong of me,

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Speaker 1: unfortunately to quote and James Bullard alluded to this today folks,

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Speaker 1: where he said he was worried about shocks to the

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Speaker 1: system and too rapid market adjustments is the fet of

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Speaker 1: depths perhaps with the dots to where the market is.

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Speaker 1: But Mr Fisher, of course, with the acclaimed three days

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Speaker 1: before the crash, stock prices have reached what looks like

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Speaker 1: a permanently high plateau. We all have our skeletons in

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Speaker 1: our closet as this irving Fisher. Do you worry, David

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Speaker 1: person about market adjustments and does that lead us to

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Speaker 1: a cautious, measured approach? Well, I think we have seen

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Speaker 1: significant financial market volatility you know, certainly over the last year,

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Speaker 1: and I think that has led to more cautious policy

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Speaker 1: moves on the part of a central bank, certainly our

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Speaker 1: central bank, where you know, core inflation is edging up.

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Speaker 1: I think there's no question about that. But because the

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Speaker 1: financial market volatility and concerns about fragility, the fit has

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Speaker 1: been more cautious than probably this is critical and this

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Speaker 1: is what nationwide does so well. The idea of inflation

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Speaker 1: is up. And part of that, or what we'll call

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Speaker 1: core everyday inflation expenses such as housing impute that in

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Speaker 1: whether it's imputed rent, imputed housing impute, this impute that

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Speaker 1: David Person, is the character of this new surgeon inflation

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Speaker 1: different than others we've seen. Well, I'm not sure to

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Speaker 1: call it a church at this point. I know I

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Speaker 1: knew you're gonna get me on it. The moment I

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Speaker 1: use the word, I said, person is gonna put me

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Speaker 1: in the nationwide time out chair. Um is it different? Um?

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Speaker 1: It is different in the sense that, uh, goods inflation,

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Speaker 1: particularly commodity inflation, is very very weak, if if existing

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Speaker 1: at all, because of we growth around the world. The

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Speaker 1: inflation we're seeing today is services based, and you know

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Speaker 1: that is somewhat different. But on the other hand, the

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Speaker 1: US economy is more and more services based economy, and

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Speaker 1: so the inflation is no less real by it being

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Speaker 1: um services based. Where's the consumer? This is the other debate, David,

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Speaker 1: that I think you've got a different pulse sign being

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Speaker 1: out in Ohio. I mean the basic idea of where

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Speaker 1: whether the consumer. We get different opinions. I think the

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Speaker 1: consumer is doing okay. I think, uh, you know, certainly

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Speaker 1: at the high end, with the stock market doing well,

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Speaker 1: consumption that proper end things is doing very well. But

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Speaker 1: I think as as we continue to see job growth

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Speaker 1: be solid, income gains grow modestly, we're gonna see spending

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Speaker 1: increase on the part of consumers over this year. By

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Speaker 1: the end of the year, we're gonna look back and say,

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Speaker 1: you know, the consumer was was pretty good this year. David,

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Speaker 1: thank you so much, particularly for that clinic on Fisherian

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Speaker 1: neo Fisherian theory. Not every day you've got a guy

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Speaker 1: that comes on that can do that. Just just pop

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Speaker 1: right in and talk about fisher from the twenties and

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Speaker 1: uh yeah, from the twenties, that would be the decade

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Speaker 1: David Berson is with nationwide. He is their chief the college,

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Speaker 1: John Tucker, did your eyes glaze over there? Neo fish

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Speaker 1: Neo for sharing, It's not Stanley Fisher. No, I did

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Speaker 1: not know it's been up this sty Fisher, but I

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Speaker 1: must have been. I got a couple of tweets that said, hey,

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Speaker 1: we should have talked a lot more about neo Fisherian,

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Speaker 1: but within the time frame that we had, it was

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Speaker 1: a little people that are experts on neo Fisherian dynamics. Yeah,

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Speaker 1: it would be the real GDP and the inflation. I man,

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Speaker 1: David Gura is an expert on neo fish economics. He

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Speaker 1: wanders in here that at us forward into the next

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Speaker 1: hour of Bloomberg Radio World worldwide. The only Neo for

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Speaker 1: sharing is David Kotok and Trout. That's that's what he's

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Speaker 1: looking for, is all. And it was. That was great, folks. Um.

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Speaker 1: I urge you to look out on our various social

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Speaker 1: media and iTunes. The podcast I hope will be out

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Speaker 1: here in a bit the complete interview with James Bollard.

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Speaker 1: I think it was a different way to speak to

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Speaker 1: our public policy interview. Maybe it'd be a good idea

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Speaker 1: instead of a press conference. John Tucker, Janet Yellen could

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Speaker 1: just have a conversation with Mike McKee and Tom Keane.

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Speaker 1: We bring in somebody from the outside Binion an Apple

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Speaker 1: Bomb from the New York Times, somebody like that to

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Speaker 1: help us out. But just you know, a conversation with Jane,

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Speaker 1: and then policy we can talk to her about Neo

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Speaker 1: y yea Ellian policy as well. Anyways, it's fine. We

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Speaker 1: hope you enjoy the economics we do. We try to

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Speaker 1: keep it in the King's English as best as we can.

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Speaker 1: And of course, look, you cant finance investment in international

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Speaker 1: relations as well. So a lot uh going on here.

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Speaker 1: Let me see the latest headlines from Belgium. We'll have

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Speaker 1: these for you through the day. There is a new

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Speaker 1: police operation in the Old Lacked area of Brussels that

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Speaker 1: according to the Associated Press. Stay with us through the day.

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Speaker 1: Our newscast from Bloomberg Radio. This is Bloomberg Surveillance