1 00:00:03,320 --> 00:00:07,600 Speaker 1: This is Bloomberg Surveillance. Of fatility is the result of 2 00:00:07,800 --> 00:00:11,320 Speaker 1: a build up over many, many years, fed sponsored of 3 00:00:11,520 --> 00:00:14,160 Speaker 1: carry trades. We need our banking sector to be able 4 00:00:14,160 --> 00:00:17,120 Speaker 1: to make mistakes because they're all human, without bringing down 5 00:00:17,120 --> 00:00:19,479 Speaker 1: the whole economy or requiring a bailout. The pressures that 6 00:00:19,640 --> 00:00:23,240 Speaker 1: most companies feel are not translating into the kind of 7 00:00:23,320 --> 00:00:25,759 Speaker 1: investment that I think we need to drive economic growth 8 00:00:25,760 --> 00:00:29,240 Speaker 1: in America or anywhere else. Bloomberg Surveillance your link to 9 00:00:29,320 --> 00:00:33,640 Speaker 1: the world of economics, finance, and investment on Bloomberg Radio. 10 00:00:33,760 --> 00:00:37,360 Speaker 1: Good running, everyone, Michael McKay and Tom came Bloomberg Surveillance worldwide. 11 00:00:37,360 --> 00:00:41,000 Speaker 1: Good morning on Bloomberg Radio Plus. We welcome you Bloomberg 12 00:00:41,000 --> 00:00:45,760 Speaker 1: dot Com, Bloomberg twelve, Hunt in Boston, FM Washington eleventh 13 00:00:45,920 --> 00:00:48,480 Speaker 1: Rio Here in New York and waking up. We say 14 00:00:48,560 --> 00:00:53,159 Speaker 1: a good morning to San Francisco and the Bay Area. 15 00:00:53,760 --> 00:00:56,400 Speaker 1: We need to look at foreign exchange, which just simply 16 00:00:56,440 --> 00:00:59,080 Speaker 1: means we need to look at cable. The four X 17 00:00:59,120 --> 00:01:01,840 Speaker 1: brief brought about Interactive Broker's winner of f X Weeks 18 00:01:01,840 --> 00:01:05,319 Speaker 1: two thousand fifteen award for the Best Retail for X 19 00:01:05,720 --> 00:01:09,080 Speaker 1: trading platform visit ib at I b k R dot 20 00:01:09,120 --> 00:01:13,199 Speaker 1: com slash four x. Here's what hasn't happened. Euros somewhat 21 00:01:13,240 --> 00:01:19,160 Speaker 1: weaker fractionally one, making a one ten dollar stronger fractionally. 22 00:01:19,959 --> 00:01:23,200 Speaker 1: The Sterling fractured from one forty one down to one 23 00:01:23,840 --> 00:01:25,800 Speaker 1: eighty a little bit of a bit in the last 24 00:01:25,800 --> 00:01:30,319 Speaker 1: hour one thirty one, but to Franci Laqua truly shocked 25 00:01:30,880 --> 00:01:33,880 Speaker 1: earlier at the plunge from forty down to a thirty 26 00:01:33,880 --> 00:01:38,480 Speaker 1: eight uh handle A German tenure yield has done better 27 00:01:38,560 --> 00:01:41,479 Speaker 1: in the last hour, but made a dash for new 28 00:01:41,760 --> 00:01:45,920 Speaker 1: recent low yields, not record low yields positive point one 29 00:01:46,040 --> 00:01:49,160 Speaker 1: five three as well features up sixteen, features up one 30 00:01:49,200 --> 00:01:51,840 Speaker 1: forty and uh. You know within for an exchange pretty 31 00:01:51,920 --> 00:01:54,800 Speaker 1: much a churn. A Redman be a little bit weaker 32 00:01:55,440 --> 00:02:01,559 Speaker 1: today within that managed peg uh, to say the least. Uh. 33 00:02:01,760 --> 00:02:06,360 Speaker 1: Michael McKee a most interesting guest who he has a tattoo. 34 00:02:06,920 --> 00:02:08,280 Speaker 1: I don't know if you knew this. He's got a 35 00:02:08,280 --> 00:02:12,079 Speaker 1: tattoo on his left tennis arm. It says eighteen million 36 00:02:12,360 --> 00:02:15,680 Speaker 1: or bust. He got that tattoo made in Detroit like 37 00:02:15,800 --> 00:02:19,880 Speaker 1: five years ago. Eighteen Did you ever think we get 38 00:02:19,919 --> 00:02:25,240 Speaker 1: to eighteen million units of your American automobile business. How 39 00:02:25,240 --> 00:02:27,480 Speaker 1: did you know? I was left handed? I just do 40 00:02:27,560 --> 00:02:31,480 Speaker 1: that my research. Steve rat this of course, and what 41 00:02:31,639 --> 00:02:35,120 Speaker 1: the cars are for? Uh too long of course. Uh. 42 00:02:35,480 --> 00:02:39,760 Speaker 1: Joining us on investment, did you did you ever million? Never? 43 00:02:39,919 --> 00:02:42,200 Speaker 1: Never did we think it would be eighteen million. And 44 00:02:42,360 --> 00:02:45,040 Speaker 1: we actually, as you know, we restructured these companies to 45 00:02:45,080 --> 00:02:47,760 Speaker 1: make money at eleven million because we weren't really sure 46 00:02:47,800 --> 00:02:49,240 Speaker 1: where it was going to go from there. I thought 47 00:02:49,280 --> 00:02:52,240 Speaker 1: fifteen was possible because that was the replacement rate you 48 00:02:52,240 --> 00:02:54,640 Speaker 1: needed to get to fifteen just to keep the fleet 49 00:02:54,680 --> 00:02:57,040 Speaker 1: from aging. But this is great news, obviously from car 50 00:02:57,080 --> 00:02:59,799 Speaker 1: companies for the country. Mike, before you jump in with Steve, 51 00:03:00,160 --> 00:03:02,600 Speaker 1: I do want to do the disclaimer that is publicly 52 00:03:02,680 --> 00:03:07,280 Speaker 1: known you handle philanthropical investments for Michael Bloomberg. He is 53 00:03:07,320 --> 00:03:11,280 Speaker 1: the principal owner of Bloombergulp and this radio station. Michael 54 00:03:11,440 --> 00:03:16,079 Speaker 1: and all that we are sort of playing off. I'm 55 00:03:16,080 --> 00:03:19,040 Speaker 1: sure you hear Jack lose remarkets. Um. Playing off of 56 00:03:19,080 --> 00:03:21,320 Speaker 1: those and asking people is the only thing we have 57 00:03:21,400 --> 00:03:24,640 Speaker 1: to fear, fear itself. Right now, You're the first one 58 00:03:24,680 --> 00:03:28,960 Speaker 1: we've had in sort of representing the Wall Street side. Um, 59 00:03:29,160 --> 00:03:32,560 Speaker 1: the the economists view is that, no, the fundamentals are 60 00:03:32,600 --> 00:03:35,360 Speaker 1: not that bad, particularly in the United States. Uh. And 61 00:03:35,520 --> 00:03:38,600 Speaker 1: the policymaker side is that, you know, we don't need 62 00:03:38,640 --> 00:03:43,600 Speaker 1: to react to every gyration in the markets. UH. So 63 00:03:43,800 --> 00:03:46,600 Speaker 1: the markets telling us something about what's going to happen, 64 00:03:47,120 --> 00:03:50,600 Speaker 1: or are they reflecting something that has happened or is happening, 65 00:03:51,000 --> 00:03:56,720 Speaker 1: or is this just irrational annoy the opposite of exuberances pessimism. 66 00:03:56,800 --> 00:03:59,440 Speaker 1: So remember that on one side you have the markets, which, 67 00:03:59,720 --> 00:04:02,240 Speaker 1: to use the old joke, have produced nine predicted nine 68 00:04:02,280 --> 00:04:04,560 Speaker 1: out of the last five or sessions. On the other hand, 69 00:04:04,640 --> 00:04:06,880 Speaker 1: you have the economists. And I saw the other day 70 00:04:06,880 --> 00:04:09,480 Speaker 1: in the Economist magazine that the i m F there 71 00:04:09,480 --> 00:04:12,240 Speaker 1: have been two hundred and twenty instances of negative GDP 72 00:04:12,400 --> 00:04:14,720 Speaker 1: growth among its members in the fifteen years from two 73 00:04:14,760 --> 00:04:17,360 Speaker 1: thousand two thousand and fourteen. The i m F failed 74 00:04:17,360 --> 00:04:20,320 Speaker 1: to predict every single one of them. So economists don't 75 00:04:20,320 --> 00:04:22,800 Speaker 1: have a great record of They tend to be too optimistic. 76 00:04:22,839 --> 00:04:25,640 Speaker 1: Markets may tend to be too pessimistic. I think Jack 77 00:04:25,920 --> 00:04:28,359 Speaker 1: is basically saying the US is the best house in 78 00:04:28,360 --> 00:04:31,480 Speaker 1: a bad neighborhood. Can't disagree with that. He's saying that 79 00:04:31,640 --> 00:04:35,479 Speaker 1: other countries need to do major policy restructuring changes to 80 00:04:35,520 --> 00:04:38,440 Speaker 1: improve their economies. Can't disagree with that. The only two 81 00:04:38,480 --> 00:04:40,680 Speaker 1: places I would slightly differ with him are one, I 82 00:04:40,680 --> 00:04:42,400 Speaker 1: think there's still things that the US can do. We 83 00:04:42,440 --> 00:04:44,360 Speaker 1: may be the best house in a bad neighborhood, but 84 00:04:44,360 --> 00:04:46,040 Speaker 1: there's a lot of stuff we should be doing anywhere. 85 00:04:46,080 --> 00:04:49,279 Speaker 1: Not yeah, exactly fixed the house paint, that there's a 86 00:04:49,279 --> 00:04:51,560 Speaker 1: lot to do. And secondly, I do think he is 87 00:04:51,600 --> 00:04:54,720 Speaker 1: somewhat under understating the risks. I don't think the only 88 00:04:54,760 --> 00:04:57,200 Speaker 1: thing we have to fear is fear itself. I think 89 00:04:57,440 --> 00:05:00,360 Speaker 1: each each region, each country has its own set of issues. 90 00:05:00,400 --> 00:05:02,560 Speaker 1: But as you go around the world, you see what's 91 00:05:02,560 --> 00:05:04,679 Speaker 1: going on with the euro and the European and the continent. 92 00:05:04,920 --> 00:05:07,160 Speaker 1: You know, see Britain kind of going off and who 93 00:05:07,200 --> 00:05:10,240 Speaker 1: knows which direction. China you've talked about a lot so on. 94 00:05:10,320 --> 00:05:13,039 Speaker 1: Brazil's a mess. So no, there are some real things 95 00:05:13,080 --> 00:05:14,400 Speaker 1: to worry about out there. And the i m F 96 00:05:14,480 --> 00:05:17,120 Speaker 1: recognized that in their last forecast they took growth rates down. 97 00:05:17,200 --> 00:05:19,360 Speaker 1: As you know, well as someone who has to put 98 00:05:20,080 --> 00:05:23,120 Speaker 1: your money or the founder and majority owners money where 99 00:05:23,160 --> 00:05:27,279 Speaker 1: your mouth is. How are you approaching the world now, 100 00:05:27,320 --> 00:05:29,440 Speaker 1: what are you doing to either make money or not 101 00:05:29,600 --> 00:05:34,000 Speaker 1: lose money around the world Without getting into the specifics, 102 00:05:34,040 --> 00:05:35,880 Speaker 1: because the majority owner does not want me to get 103 00:05:35,920 --> 00:05:41,359 Speaker 1: into the portfolio to talk philosophically, we we we agree 104 00:05:41,400 --> 00:05:44,000 Speaker 1: with Jack. We are far more constructive about the US 105 00:05:44,240 --> 00:05:46,960 Speaker 1: and and have a far larger exposure to the US. 106 00:05:47,080 --> 00:05:50,440 Speaker 1: We have been very reticent about Europe. We think that 107 00:05:50,480 --> 00:05:53,880 Speaker 1: the structural problems and the euro are a huge challenge 108 00:05:53,920 --> 00:05:56,800 Speaker 1: for Europe and we've been, as I say, very very 109 00:05:56,920 --> 00:06:00,599 Speaker 1: very conservative about that. We have been extremely conservative to 110 00:06:00,600 --> 00:06:03,400 Speaker 1: the point of essentially being absent from places like Brazil, 111 00:06:03,600 --> 00:06:07,040 Speaker 1: which scare US a great deal. And though I guess 112 00:06:07,080 --> 00:06:09,320 Speaker 1: the most contrary view we have is we have been 113 00:06:09,360 --> 00:06:12,080 Speaker 1: positive on China. We don't believe they know how to 114 00:06:12,120 --> 00:06:14,760 Speaker 1: manage markets or how to deal with feign exchange issues, 115 00:06:15,120 --> 00:06:17,800 Speaker 1: but we still believe and we also don't believe that 116 00:06:17,839 --> 00:06:20,800 Speaker 1: they are being transparent about their numbers. But we still 117 00:06:20,839 --> 00:06:23,560 Speaker 1: believe fundamentally there's an enormous amount of energy and that 118 00:06:23,640 --> 00:06:25,880 Speaker 1: economy and a lot of growth coming. A lot of 119 00:06:25,920 --> 00:06:28,960 Speaker 1: the growth goes to nominal GDP in the animal spirit. 120 00:06:29,000 --> 00:06:31,240 Speaker 1: You have a history through your journalism and your work 121 00:06:31,240 --> 00:06:35,599 Speaker 1: at Lazard and your investment work now of monitoring the 122 00:06:35,680 --> 00:06:40,560 Speaker 1: global animal spirit are What we're doing is rationalizing over 123 00:06:40,640 --> 00:06:45,760 Speaker 1: to three and five years our investment potential or or 124 00:06:45,880 --> 00:06:50,640 Speaker 1: potential investment down to a new single digit world. I 125 00:06:50,680 --> 00:06:53,560 Speaker 1: think people are adjusting themselves to a new single digit world. 126 00:06:53,600 --> 00:06:55,560 Speaker 1: Actually I left one important thing out of what we 127 00:06:55,560 --> 00:06:57,400 Speaker 1: were talking about before. I just should mention, which I 128 00:06:57,440 --> 00:07:00,480 Speaker 1: know you've talked a lot about, which is that as 129 00:07:00,480 --> 00:07:03,920 Speaker 1: important as it was to improve regulation of banks, there 130 00:07:03,960 --> 00:07:07,279 Speaker 1: have been a lot of negative consequences for liquidity, um, 131 00:07:07,400 --> 00:07:10,680 Speaker 1: for for lending, for capital flows and so on. And 132 00:07:10,720 --> 00:07:13,080 Speaker 1: that's another huge problem that that we face. But no, 133 00:07:13,200 --> 00:07:16,840 Speaker 1: I think the investment community is very much adjusting itself 134 00:07:17,280 --> 00:07:20,160 Speaker 1: to a lower future growth rate in terms of how 135 00:07:20,200 --> 00:07:24,560 Speaker 1: it looks at it's it's investments. Does the investment community 136 00:07:24,600 --> 00:07:27,760 Speaker 1: then continue to take risks to try to raise that 137 00:07:27,840 --> 00:07:31,640 Speaker 1: bogie because it's not acceptable to them? Is that one 138 00:07:31,680 --> 00:07:35,240 Speaker 1: reason we see so much longing for central banks to 139 00:07:35,320 --> 00:07:38,080 Speaker 1: do more. I think the investment community in general is 140 00:07:38,120 --> 00:07:40,760 Speaker 1: actually being getting quite conservative. I think there is a 141 00:07:40,800 --> 00:07:43,360 Speaker 1: lot of fear in the Investment Committee, and I think 142 00:07:43,440 --> 00:07:46,520 Speaker 1: and we are among those. I don't think we're terrified, 143 00:07:46,600 --> 00:07:49,720 Speaker 1: but I think we're being prudent about pulling back exposure, 144 00:07:49,800 --> 00:07:52,520 Speaker 1: not increasing it at this moment. I think we all 145 00:07:52,560 --> 00:07:54,760 Speaker 1: believe that there will be opportunities out of all this, 146 00:07:55,040 --> 00:07:57,960 Speaker 1: certainly in the credit markets as more and more companies 147 00:07:58,000 --> 00:08:01,360 Speaker 1: start to get into distress territory or even default. But 148 00:08:01,560 --> 00:08:03,760 Speaker 1: I think in terms of the equity markets, I think 149 00:08:03,800 --> 00:08:07,320 Speaker 1: we're all being very very cautious. Steve Wrightner, how do 150 00:08:07,360 --> 00:08:09,960 Speaker 1: you see We've spent so much time looking at Brexit 151 00:08:10,000 --> 00:08:13,600 Speaker 1: in London versus Europe. We haven't talked in ages about 152 00:08:13,720 --> 00:08:18,040 Speaker 1: London versus New York. How are we doing? I think 153 00:08:18,040 --> 00:08:21,120 Speaker 1: we're doing. I think we're doing exceptionally well, in part 154 00:08:21,200 --> 00:08:24,440 Speaker 1: because our economy is doing exceptionally well, and also because 155 00:08:24,880 --> 00:08:27,600 Speaker 1: our banks are winning. If you look around the world 156 00:08:27,640 --> 00:08:30,840 Speaker 1: at banks share of the market, for all of the 157 00:08:32,000 --> 00:08:34,560 Speaker 1: regulators feet on the necks of our banks, they have 158 00:08:34,600 --> 00:08:36,720 Speaker 1: actually increased their market share. You would not want to 159 00:08:36,720 --> 00:08:40,199 Speaker 1: trade our banking system, certainly for Deutsche Bank or Creditly 160 00:08:40,200 --> 00:08:42,200 Speaker 1: and Air any of those banks. And so while it 161 00:08:42,280 --> 00:08:45,000 Speaker 1: is a global business, the fact that our that our 162 00:08:45,040 --> 00:08:48,000 Speaker 1: banks are our winning makes New York. How do you 163 00:08:48,080 --> 00:08:51,559 Speaker 1: deal with President cash Cary newly mented that the Minieapolis 164 00:08:51,559 --> 00:08:56,000 Speaker 1: Fed wanting to have a symposium. God love him, he 165 00:08:56,040 --> 00:08:59,440 Speaker 1: wants to do it right, have a symposium to adjust 166 00:08:59,440 --> 00:09:05,960 Speaker 1: are two big to fail size? I worked with Neil briefly. 167 00:09:05,960 --> 00:09:08,040 Speaker 1: We overlapped the Treasury. I have a lot of respect 168 00:09:08,120 --> 00:09:10,960 Speaker 1: for him, and I would say, respectfully on the question 169 00:09:11,000 --> 00:09:13,880 Speaker 1: of breaking up the banks, he and others who advocated 170 00:09:13,880 --> 00:09:16,199 Speaker 1: are completely and utterly wrong. First of all, if you 171 00:09:16,240 --> 00:09:19,360 Speaker 1: look at the facts, our banking system is less concentrated 172 00:09:19,400 --> 00:09:23,000 Speaker 1: than the banking system in the UK, in Canada, in Germany, 173 00:09:23,080 --> 00:09:26,680 Speaker 1: in France, and all of our principal competitors. Secondly, you 174 00:09:26,720 --> 00:09:28,440 Speaker 1: are never going to break up the banks to the 175 00:09:28,480 --> 00:09:31,120 Speaker 1: point where they're truly too big. No one is too 176 00:09:31,160 --> 00:09:34,920 Speaker 1: big to fail. Long term LTCM failed in the late nineties. 177 00:09:34,920 --> 00:09:37,200 Speaker 1: That would have not been on anybody's list of things 178 00:09:37,200 --> 00:09:38,839 Speaker 1: that were too big to fail, and yet it almost 179 00:09:38,920 --> 00:09:42,200 Speaker 1: brought down our banking system. The way to avoid another 180 00:09:42,240 --> 00:09:45,959 Speaker 1: crisis is by better regulation and being more careful about 181 00:09:45,960 --> 00:09:49,040 Speaker 1: what these banks do. The financial crisis was first and 182 00:09:49,080 --> 00:09:51,960 Speaker 1: foremost a failure of regulation and I'm not talking about 183 00:09:52,000 --> 00:09:55,400 Speaker 1: last Stiegel. I'm talking about basic regulatory supervision of the 184 00:09:55,480 --> 00:09:57,640 Speaker 1: quality of the balance sheets, the quality of the lending. 185 00:09:58,040 --> 00:10:00,200 Speaker 1: That was really what brought on the financial crisis US, 186 00:10:00,480 --> 00:10:04,600 Speaker 1: not the bank's getting too big, Steve, never enough time. 187 00:10:04,640 --> 00:10:07,320 Speaker 1: Thanks very much for stopping. Can you come in and 188 00:10:07,360 --> 00:10:09,840 Speaker 1: do an hour sometime? Sure, whenever you want. You know, 189 00:10:09,920 --> 00:10:11,960 Speaker 1: I I don't you know. I mean beyond went out 190 00:10:12,000 --> 00:10:16,280 Speaker 1: of business on Madison. One's ever recovered your fault. We 191 00:10:16,280 --> 00:10:19,319 Speaker 1: should have made in the diners are New York City. 192 00:10:19,400 --> 00:10:21,320 Speaker 1: The reasons they really would out of businesses they gotta 193 00:10:21,360 --> 00:10:24,480 Speaker 1: be from the food inspectors. And that was the beginning 194 00:10:24,520 --> 00:10:32,360 Speaker 1: of the end. Steve. The bigger picture here we will 195 00:10:32,559 --> 00:10:37,000 Speaker 1: advisors futures negative sixteen, down futures negative one thirty nine. 196 00:10:37,040 --> 00:10:40,079 Speaker 1: We're watching a stronger Japanese. Yeah, not two important levels, 197 00:10:40,120 --> 00:10:45,000 Speaker 1: but nevertheless one eleven seventy five goes away from obionomics. 198 00:10:45,360 --> 00:10:51,520 Speaker 1: Sterling the story when thirty nine thirty six, Well, let's 199 00:10:51,520 --> 00:10:55,000 Speaker 1: take im and get the latest world of national John Alright, 200 00:10:55,040 --> 00:10:57,680 Speaker 1: Mike and Todd. With the big win in the Nevada caucuses, 201 00:10:57,720 --> 00:11:00,199 Speaker 1: Donald Trump has claimed the third straight commanded victor were 202 00:11:00,200 --> 00:11:03,719 Speaker 1: the race for the Republican presidential nomination. Marco Rubio ted 203 00:11:03,760 --> 00:11:07,440 Speaker 1: Cruz type race four second deadly storm system that spawn 204 00:11:07,480 --> 00:11:10,280 Speaker 1: tornadoes in Gulf Coast states last night. He's got to 205 00:11:10,360 --> 00:11:13,960 Speaker 1: bring severe weathers to Carolina is by this afternoon. The 206 00:11:13,960 --> 00:11:16,800 Speaker 1: man accused of randomly killing six people in Michigan had 207 00:11:16,880 --> 00:11:20,719 Speaker 1: a personal store of weapons that included handguns and long guns, 208 00:11:20,760 --> 00:11:23,000 Speaker 1: but there was nothing in his past that prevented him 209 00:11:23,000 --> 00:11:26,240 Speaker 1: from owning as many guns as he could afford. And 210 00:11:26,400 --> 00:11:30,240 Speaker 1: Duncan Donat's fighting to reclaim it's turf breakfast, the chain 211 00:11:30,360 --> 00:11:33,640 Speaker 1: revamping its menu boards to emphasize coffee and all day 212 00:11:33,720 --> 00:11:37,240 Speaker 1: breakfast foods, a bid to remind America it served eggs 213 00:11:37,240 --> 00:11:42,040 Speaker 1: and sausage during afternoon hours, long before McDonald's ever got 214 00:11:42,040 --> 00:11:46,600 Speaker 1: the idea. Just a coffee and Eva Eva, I'd have 215 00:11:46,720 --> 00:11:50,040 Speaker 1: to say, and I've tried the moment, I'm trying to practice. Huge, 216 00:11:50,520 --> 00:11:54,480 Speaker 1: I haven't got there yet, Huge, Will you keep trying? 217 00:11:54,520 --> 00:11:59,640 Speaker 1: It's another huge nine o'clock hour of Bloomberg Surveillance Futures 218 00:11:59,760 --> 00:12:07,040 Speaker 1: neg of sixteen. Thank you for listening. Market Drivers, brought 219 00:12:07,040 --> 00:12:08,880 Speaker 1: to you by your Mercedes Ben's tri State dealer. When 220 00:12:08,880 --> 00:12:10,920 Speaker 1: it comes to winter elements, put your best four wheels 221 00:12:10,920 --> 00:12:13,280 Speaker 1: forward with Mercedes Ben's Formatic all wheel Drive. Is at 222 00:12:13,320 --> 00:12:21,160 Speaker 1: your Mercedes Bens Tri State dealer for a test drive today. 223 00:12:22,400 --> 00:12:25,800 Speaker 1: Global Business News twenty four hours a day at Bloomberg 224 00:12:25,840 --> 00:12:28,880 Speaker 1: dot com, the Radio, plus Mobil and on your radio. 225 00:12:29,200 --> 00:12:33,360 Speaker 1: This is a Bloomberg Business Flash and I'm caring Moscow. 226 00:12:33,400 --> 00:12:36,560 Speaker 1: This updates brought to you by Interactive Brokers and CME Group. 227 00:12:36,600 --> 00:12:39,079 Speaker 1: If you're looking for a global futures contracts with low 228 00:12:39,080 --> 00:12:43,240 Speaker 1: trading costs, look no further. Interactive Brokers is the industry leader. 229 00:12:43,320 --> 00:12:46,440 Speaker 1: Learn more at Interactive Brokers dot com, slash CME Group. 230 00:12:46,960 --> 00:12:51,120 Speaker 1: US Treasury Secretary Jack lou downplaying expectations for an emergency 231 00:12:51,200 --> 00:12:54,800 Speaker 1: response to global market turbulence when group of twenty finance 232 00:12:54,880 --> 00:12:58,840 Speaker 1: chiefs and central bankers meet this week in China. I 233 00:12:58,920 --> 00:13:00,800 Speaker 1: don't think this is a moment in time when you're 234 00:13:00,800 --> 00:13:04,280 Speaker 1: going to see individual countries make the kinds of specific 235 00:13:04,360 --> 00:13:08,880 Speaker 1: commitments that have been made in some other contexts that 236 00:13:08,960 --> 00:13:11,959 Speaker 1: have been marked by real crisis. This is not a 237 00:13:12,000 --> 00:13:15,440 Speaker 1: moment of crisis. This is a moment where there you've 238 00:13:15,440 --> 00:13:19,200 Speaker 1: got real economies doing better than markets think you know. 239 00:13:19,559 --> 00:13:23,800 Speaker 1: In some cases, Blue spoke earlier on Bloomberg Radio and television. 240 00:13:23,880 --> 00:13:26,960 Speaker 1: US dock index futures meanwhile, dropping is falling. Oil prices 241 00:13:27,000 --> 00:13:30,560 Speaker 1: continue to pray on investors global growth concerns. SNP E 242 00:13:30,600 --> 00:13:33,360 Speaker 1: many futures down seventeen points and now eveny futures down 243 00:13:33,360 --> 00:13:36,720 Speaker 1: a hundred forty six NAS documenty futures down fifty decks. 244 00:13:36,720 --> 00:13:39,600 Speaker 1: In Germany's down two point four percent. Ten year treasury 245 00:13:39,640 --> 00:13:42,160 Speaker 1: up ten thirty seconds, the yield one point six eight percent. 246 00:13:42,520 --> 00:13:44,800 Speaker 1: Nimex scrude oil down three point a percent or a 247 00:13:44,840 --> 00:13:48,320 Speaker 1: dollar twenty to thirty sixty six of Beryl Comex gold 248 00:13:48,400 --> 00:13:50,240 Speaker 1: up one point a per cent or twenty two dollars 249 00:13:50,240 --> 00:13:53,200 Speaker 1: to twelve forty four sixty announced. The euro a dollar 250 00:13:53,280 --> 00:13:56,280 Speaker 1: oh nine eight five, the en one eleven point seven seven. 251 00:13:56,520 --> 00:13:58,920 Speaker 1: That's a Bloomberg business flash, Tom and Mike during the 252 00:13:59,040 --> 00:14:01,480 Speaker 1: thanks so much curf ottening today, where a hundred beeves 253 00:14:01,600 --> 00:14:04,280 Speaker 1: was a big story, one full percentage point between the 254 00:14:04,280 --> 00:14:06,760 Speaker 1: ten year and two year yield, we flattened out further 255 00:14:06,840 --> 00:14:10,880 Speaker 1: day nineties point six basis points a difference in yield. 256 00:14:10,880 --> 00:14:14,920 Speaker 1: That that's a of note too many people. Michael McKee um, 257 00:14:15,000 --> 00:14:17,440 Speaker 1: this is a good economist who writes with Peter Hooper 258 00:14:17,440 --> 00:14:20,680 Speaker 1: over at Deutsche Bank, and he leads with the mother 259 00:14:20,920 --> 00:14:26,080 Speaker 1: of all optimism charts. It's it's the foundation chart for 260 00:14:26,200 --> 00:14:30,640 Speaker 1: why Torsten Slock or David Kelly or Mark Zandy take 261 00:14:30,680 --> 00:14:34,920 Speaker 1: an optimistic attack. Torsten is with us and he makes 262 00:14:34,960 --> 00:14:37,640 Speaker 1: the very good point. And everybody is concerned about the 263 00:14:37,680 --> 00:14:41,280 Speaker 1: impact of the financial market volatility we have seen because 264 00:14:41,680 --> 00:14:44,480 Speaker 1: it may be causing problems in credit markets, which will 265 00:14:44,520 --> 00:14:48,360 Speaker 1: then slow the economy. Torsen was smart enough to actually 266 00:14:48,360 --> 00:14:54,000 Speaker 1: go look at credit markets and you find the prescription 267 00:14:54,040 --> 00:14:57,960 Speaker 1: has not happened, absolutely, So it's a look at overall 268 00:14:58,000 --> 00:15:01,080 Speaker 1: credit growth. The fascinating thing is that the Fed actually 269 00:15:01,080 --> 00:15:04,080 Speaker 1: has weekly data, and the weekly data comes out every 270 00:15:04,080 --> 00:15:07,000 Speaker 1: Friday at the four fifteen PM and I go and 271 00:15:07,000 --> 00:15:09,120 Speaker 1: look at my Bloomberg expreen and see what does data 272 00:15:09,160 --> 00:15:11,280 Speaker 1: show this week? And when you did that last Friday, 273 00:15:11,480 --> 00:15:15,360 Speaker 1: you would see that there's just no evidence of credit tightening. 274 00:15:15,400 --> 00:15:17,880 Speaker 1: When it comes to bank lending. Bank lending is growing 275 00:15:17,880 --> 00:15:21,880 Speaker 1: across all types of loans, auto loans, consumer loans, more broadly, 276 00:15:22,280 --> 00:15:26,440 Speaker 1: commercial industrial loans, mortgages, even commercial really date loans. You're 277 00:15:26,480 --> 00:15:28,880 Speaker 1: seeing just not much sign of a slowdown in the 278 00:15:28,920 --> 00:15:31,080 Speaker 1: actual lending data. There's a lot of other indicators we 279 00:15:31,120 --> 00:15:33,560 Speaker 1: worry about, but the actual data on a weekly basis, 280 00:15:33,600 --> 00:15:35,880 Speaker 1: which we watch very carefully, is just not showing a 281 00:15:35,880 --> 00:15:39,280 Speaker 1: credit crunch up to this point. People are looking at say, 282 00:15:40,080 --> 00:15:43,680 Speaker 1: high yield spreads when you become high yeld junk high 283 00:15:43,720 --> 00:15:46,200 Speaker 1: yeld spreads and saying, you know the world's gonna come 284 00:15:46,200 --> 00:15:49,320 Speaker 1: to it end well, and that's true, and certainly we 285 00:15:49,360 --> 00:15:50,960 Speaker 1: are fully aware of that. But what I think is 286 00:15:51,000 --> 00:15:53,400 Speaker 1: really important is to look at page one in your 287 00:15:53,440 --> 00:15:56,720 Speaker 1: finance textbook and ask the question, how can companies raise 288 00:15:56,800 --> 00:15:59,400 Speaker 1: money if they need money? And one answer is they 289 00:15:59,400 --> 00:16:01,240 Speaker 1: can go to high yield markets. They can also go 290 00:16:01,280 --> 00:16:02,920 Speaker 1: to I G markets. They can also go to the 291 00:16:02,960 --> 00:16:05,240 Speaker 1: local bank. They could also go to venture capital, they 292 00:16:05,240 --> 00:16:07,720 Speaker 1: can go to private equity. They can even go to 293 00:16:07,880 --> 00:16:11,240 Speaker 1: other sources of financing that now are becoming more popular 294 00:16:11,280 --> 00:16:15,120 Speaker 1: crowdfunding and other areas. So they basically asked the question, 295 00:16:15,200 --> 00:16:18,000 Speaker 1: and well, which of these different sources of credit are 296 00:16:18,040 --> 00:16:20,800 Speaker 1: actually not flowing? And it's pretty clear that the high 297 00:16:20,880 --> 00:16:22,760 Speaker 1: yield is not doing particularly well at the moment. But 298 00:16:22,880 --> 00:16:27,120 Speaker 1: remember that high yield dead outstanding only makes up around 299 00:16:27,120 --> 00:16:30,600 Speaker 1: two percent of total death in the US economy, whereas 300 00:16:30,640 --> 00:16:33,680 Speaker 1: the banking take makes up a very substantial share of 301 00:16:33,760 --> 00:16:36,720 Speaker 1: all credit that's flowing. So that's why I think we 302 00:16:36,800 --> 00:16:38,960 Speaker 1: in financial markets we're looking at high yield and so 303 00:16:39,000 --> 00:16:40,640 Speaker 1: that not also at i G. But remember I G 304 00:16:40,800 --> 00:16:43,920 Speaker 1: are markets are definitely open still and there's no reason 305 00:16:44,000 --> 00:16:46,160 Speaker 1: to excect why they wouldn't continue to be so, so 306 00:16:46,200 --> 00:16:48,520 Speaker 1: that's why it's important to say, well, what are actually 307 00:16:48,560 --> 00:16:51,320 Speaker 1: the sources of financing that companies need and are those 308 00:16:51,320 --> 00:16:53,760 Speaker 1: sources of financing available? And the answer is, in my 309 00:16:53,880 --> 00:16:57,440 Speaker 1: view every sounding yes, markets are still functioning, in particular 310 00:16:57,480 --> 00:17:01,240 Speaker 1: bank credit, which is by far the most important. I 311 00:17:01,600 --> 00:17:05,359 Speaker 1: look towards at the raging battle and nobody, Yeah. I 312 00:17:05,400 --> 00:17:10,560 Speaker 1: think there's very few people talking about true recession. Chery 313 00:17:10,680 --> 00:17:15,359 Speaker 1: is talking about good growth. What does service sector inflation do? 314 00:17:16,320 --> 00:17:20,080 Speaker 1: Is the vector up and more inflation or is it 315 00:17:20,080 --> 00:17:23,679 Speaker 1: is flatter rolling over? It is indeed pointing up. And 316 00:17:23,680 --> 00:17:26,680 Speaker 1: what's really important about that is that often we debate 317 00:17:26,720 --> 00:17:31,640 Speaker 1: inflation from the global perspective of saying or China maybe slowing, 318 00:17:31,840 --> 00:17:35,240 Speaker 1: So this is going to create a disinflationary impulse for 319 00:17:35,280 --> 00:17:37,679 Speaker 1: the whole world, including the US. But remember that when 320 00:17:37,720 --> 00:17:40,520 Speaker 1: you look at the U S CPI basket, in other words, 321 00:17:40,800 --> 00:17:43,640 Speaker 1: you and my consumption and all the listeners consumption, two 322 00:17:43,720 --> 00:17:47,480 Speaker 1: thirds of that is services. And what services means is 323 00:17:47,520 --> 00:17:52,760 Speaker 1: that that's housing, transportation, healthcare, recreation, education, etcetera. And those 324 00:17:53,040 --> 00:17:57,680 Speaker 1: services parts of the CPI basket are generally doing what 325 00:17:58,400 --> 00:18:00,480 Speaker 1: is very different from what the goods out of your 326 00:18:00,480 --> 00:18:03,680 Speaker 1: CPI basket and doing every we're seeing and up taking inflation, 327 00:18:03,760 --> 00:18:05,760 Speaker 1: and most importantly, we seeing wagers go up in the 328 00:18:05,800 --> 00:18:10,879 Speaker 1: service sector. So that's why this notion that China is 329 00:18:10,920 --> 00:18:13,280 Speaker 1: having a negative impact on inflation. It is true that 330 00:18:13,400 --> 00:18:16,000 Speaker 1: China and emerging markets have an impact on US inflation 331 00:18:16,280 --> 00:18:19,119 Speaker 1: through the one third of the CPI basket that's goods, 332 00:18:19,440 --> 00:18:22,400 Speaker 1: But for the remaining two thirds, most importantly housing, which 333 00:18:22,440 --> 00:18:26,320 Speaker 1: is the thirty you are, it's difficult to imagine any 334 00:18:26,320 --> 00:18:29,960 Speaker 1: strong impact of China on that part of the inflation basket. 335 00:18:30,000 --> 00:18:33,000 Speaker 1: So the bottom line is, I still think the service 336 00:18:33,000 --> 00:18:35,560 Speaker 1: sector continues to do well in the US, and that's 337 00:18:35,600 --> 00:18:39,080 Speaker 1: why the beet is obviously very alert to these up trends. 338 00:18:39,080 --> 00:18:41,239 Speaker 1: We have seen inflation more generally that are driven very 339 00:18:41,240 --> 00:18:46,080 Speaker 1: importantly by services. Services tend to pay less. So there's 340 00:18:46,400 --> 00:18:48,439 Speaker 1: what does it take to offset to decline on the 341 00:18:48,480 --> 00:18:53,080 Speaker 1: manufacturing um production side. Yeah, so this is a really 342 00:18:53,119 --> 00:18:56,199 Speaker 1: important issue, Mike. Is The way I think about that 343 00:18:56,320 --> 00:18:58,440 Speaker 1: is that for the last one one and a half 344 00:18:58,520 --> 00:19:00,840 Speaker 1: years that the US economy has been hit by two sharks, 345 00:19:00,960 --> 00:19:03,560 Speaker 1: namely all the prices down and the dollar up, and 346 00:19:03,640 --> 00:19:07,199 Speaker 1: those two sharks hit goods and energy much harder than 347 00:19:07,240 --> 00:19:10,040 Speaker 1: it hits services, if anything, and actually lower the prices 348 00:19:10,040 --> 00:19:12,639 Speaker 1: helps services. So that's why the big question that we 349 00:19:12,680 --> 00:19:15,639 Speaker 1: should be asking ourselves is how long time will it 350 00:19:15,720 --> 00:19:19,680 Speaker 1: take more before we have gone through the problems in 351 00:19:19,720 --> 00:19:21,800 Speaker 1: the energy sector and in manufacturing. In other words, how 352 00:19:21,800 --> 00:19:24,560 Speaker 1: long is the breaking distance that is left for the 353 00:19:24,640 --> 00:19:27,160 Speaker 1: energy sector, How long is the breaking distance that's left 354 00:19:27,359 --> 00:19:29,840 Speaker 1: for the manufacturing sector before we get out on the 355 00:19:29,920 --> 00:19:32,280 Speaker 1: other side. And therefore the drag on inflation and on 356 00:19:32,320 --> 00:19:36,280 Speaker 1: the broader economy from energy and manufacturing is going through subside. 357 00:19:36,320 --> 00:19:38,199 Speaker 1: And I would argue that we are getting closer to that, 358 00:19:38,240 --> 00:19:40,720 Speaker 1: and leader we've been through that now for the last 359 00:19:40,520 --> 00:19:42,760 Speaker 1: nine months. Ters and slack with us and Deutsch your 360 00:19:42,760 --> 00:19:46,560 Speaker 1: bank with an important researching note. Where is the credit crunch? 361 00:19:46,600 --> 00:19:50,480 Speaker 1: Will continue with Dr Slack here uh in a moment 362 00:19:50,520 --> 00:19:53,920 Speaker 1: on the American economy. Also, we need to get the 363 00:19:53,960 --> 00:19:58,159 Speaker 1: markets open. It's a rumor. Futures negative, seventeen futures negative 364 00:19:59,400 --> 00:20:06,679 Speaker 1: right now in the futures Next the American economy, we 365 00:20:06,760 --> 00:20:09,280 Speaker 1: are cutting down to the opening bell, brought to you 366 00:20:09,359 --> 00:20:11,639 Speaker 1: by the refined Jeep Grand Cherokee Overland. It continues to 367 00:20:11,680 --> 00:20:14,080 Speaker 1: raise the bar. That's luxurious interior and legendary four by 368 00:20:14,080 --> 00:20:16,240 Speaker 1: four capability. Drive one at your local jeep dealer. Today 369 00:20:16,400 --> 00:20:25,200 Speaker 1: Chief the official vehicle Killington broadcasting live to New York, 370 00:20:25,240 --> 00:20:30,200 Speaker 1: Cloomberg eleventh, Rio to Washington, d C, Bloomberg one to Boston, 371 00:20:30,320 --> 00:20:34,200 Speaker 1: Bloomberg Well Hunners to San Francisco, Bloomberg nine six to 372 00:20:34,320 --> 00:20:38,360 Speaker 1: the Country series Exam Channel one ninety and around the globe, 373 00:20:38,440 --> 00:20:41,879 Speaker 1: the Bloomberg Radio mos appened Bloomberg dot Com. This is 374 00:20:41,920 --> 00:20:45,880 Speaker 1: Bloomberg Surveillance. Good morning. I'm Karen Moscow along with Tom 375 00:20:45,920 --> 00:20:48,280 Speaker 1: Keene and Michael McKee, and the opening bill is brought 376 00:20:48,280 --> 00:20:51,520 Speaker 1: to you by s C. I imagine when cognitive computing 377 00:20:51,560 --> 00:20:54,600 Speaker 1: shapes the experience you create for your investors. See how 378 00:20:54,680 --> 00:20:57,680 Speaker 1: SEIS Global Operating Platform can be your catalyst for a 379 00:20:57,720 --> 00:21:01,440 Speaker 1: business intelligence at se i C dot com slash imagine 380 00:21:01,800 --> 00:21:04,399 Speaker 1: stocks lower at the open. The SNP five hundred is 381 00:21:04,440 --> 00:21:06,760 Speaker 1: down six tenths per cent or twelve points to nineteen 382 00:21:06,760 --> 00:21:09,760 Speaker 1: o eight. Dow Jones Industrial Average down six tenths percent 383 00:21:09,880 --> 00:21:12,880 Speaker 1: or ninety three points to sixteen thousand, three hundred thirty nine, 384 00:21:13,080 --> 00:21:15,119 Speaker 1: and then as DAC down one point one percent or 385 00:21:15,119 --> 00:21:18,239 Speaker 1: forty eight points to forty four fifty four. Ten year 386 00:21:18,280 --> 00:21:20,760 Speaker 1: Treasury up nine thirty seconds, the yield one point six 387 00:21:20,800 --> 00:21:23,600 Speaker 1: eight percent. Yield on the two year points seven one percent. 388 00:21:24,000 --> 00:21:26,760 Speaker 1: Nom X screwed oil down three points six percent, down 389 00:21:26,800 --> 00:21:29,719 Speaker 1: a dollar fourteen to thirty dollars seventy three cents of barrel. 390 00:21:29,920 --> 00:21:32,159 Speaker 1: Comex gold up one point eight percent or twenty two 391 00:21:32,200 --> 00:21:34,960 Speaker 1: dollars forty cents to twelve forty five an ounce. The 392 00:21:35,080 --> 00:21:37,359 Speaker 1: euro An dollar oh nine seven six, the en one 393 00:21:37,400 --> 00:21:41,240 Speaker 1: eleven point seven three. Tom and Mike, thank you so much, Karen, Mike. 394 00:21:41,240 --> 00:21:47,080 Speaker 1: It's always interesting when the German Central Bank speaks. It's 395 00:21:47,119 --> 00:21:49,120 Speaker 1: not like when we were kids. It was a huge deal, 396 00:21:49,200 --> 00:21:51,600 Speaker 1: but it's still a big deal. It's the backbone of 397 00:21:52,160 --> 00:21:55,960 Speaker 1: the background of the European Central Bank, coming from the 398 00:21:55,960 --> 00:22:00,480 Speaker 1: Buddhist Bank. Throughout the program, we have been tracing the 399 00:22:00,640 --> 00:22:05,040 Speaker 1: outlook for the global economy through the eyes of policymakers 400 00:22:05,160 --> 00:22:09,879 Speaker 1: and UH analysts, and we started with Jack LuSE suggesting 401 00:22:09,920 --> 00:22:13,760 Speaker 1: that there is no crisis in the world. Marty Feldstein agreed. 402 00:22:14,080 --> 00:22:18,800 Speaker 1: Diana to Leva agreed and pushed back strongly against central 403 00:22:18,800 --> 00:22:23,320 Speaker 1: banks over reacting to what we are seeing. The next 404 00:22:23,400 --> 00:22:26,240 Speaker 1: central bank that everybody's got their eyes on March tenth, 405 00:22:26,320 --> 00:22:30,240 Speaker 1: the European Central Bank, what happens next with them? Our 406 00:22:30,280 --> 00:22:32,439 Speaker 1: Hans Nichols sat down just a few moments ago with 407 00:22:32,480 --> 00:22:36,600 Speaker 1: the ends Vieman. He's the president of the Bundesbank. It's 408 00:22:36,640 --> 00:22:41,640 Speaker 1: clear that the current price developments warrant a thorough monetary 409 00:22:41,680 --> 00:22:45,320 Speaker 1: policy debate in the sense that other prices have a 410 00:22:45,400 --> 00:22:49,960 Speaker 1: major dampening influence on on on on prices at this time. 411 00:22:50,080 --> 00:22:53,800 Speaker 1: But what we must ask ourselves is to what extent 412 00:22:53,920 --> 00:22:57,440 Speaker 1: this is only a short short term development through which 413 00:22:57,520 --> 00:23:00,520 Speaker 1: we should look, or to what extent it's effecting the 414 00:23:00,560 --> 00:23:05,360 Speaker 1: medium term inflation outlook through second ground effects or its 415 00:23:05,359 --> 00:23:07,919 Speaker 1: effects on inflation expectations. So let me ask you, how 416 00:23:07,960 --> 00:23:10,879 Speaker 1: would you then guide market expectations? Would you make it 417 00:23:10,880 --> 00:23:14,000 Speaker 1: clear that you're focusing on this medium term. I think 418 00:23:14,040 --> 00:23:17,000 Speaker 1: it's pretty obvious that we are focusing on the medium term, 419 00:23:17,040 --> 00:23:19,879 Speaker 1: and nobody contests that. I think we need a flory 420 00:23:19,920 --> 00:23:23,399 Speaker 1: debate first on the necessity to act, and then we 421 00:23:23,440 --> 00:23:27,400 Speaker 1: can have a debate on the instruments about disposing how 422 00:23:27,440 --> 00:23:30,840 Speaker 1: bad do things need to get before Yans Viaman, president 423 00:23:30,840 --> 00:23:34,200 Speaker 1: of Bonus Bank, changes his view on negative indust rates? 424 00:23:35,760 --> 00:23:37,920 Speaker 1: What do you want negative interest rates? Do you mean? 425 00:23:38,600 --> 00:23:40,920 Speaker 1: You seem to be fairly opposed to negative interest rates. 426 00:23:40,960 --> 00:23:43,359 Speaker 1: You seem like that's not necessarily the right. It's the 427 00:23:43,440 --> 00:23:46,640 Speaker 1: risk re word payout isn't is the isn't where you'd 428 00:23:46,640 --> 00:23:49,879 Speaker 1: want it? You know. I think what I meant to 429 00:23:49,920 --> 00:23:54,000 Speaker 1: say was that there are some instruments in our toolbox 430 00:23:54,680 --> 00:23:58,919 Speaker 1: that I deem much more problematic than others, and the 431 00:23:58,960 --> 00:24:02,320 Speaker 1: purchases of sovereign bonds are certainly among them. I mean, 432 00:24:02,359 --> 00:24:05,439 Speaker 1: I do believe that in the currency union, as the 433 00:24:05,480 --> 00:24:09,680 Speaker 1: one like the one we we we have here, this 434 00:24:09,840 --> 00:24:13,720 Speaker 1: creates a risk of blurring the lines between fiscal policy 435 00:24:13,720 --> 00:24:18,320 Speaker 1: and monetary policy. That is problematic for monetary policy for 436 00:24:18,440 --> 00:24:23,240 Speaker 1: its independence, and in that sense, I consider purchases of 437 00:24:23,280 --> 00:24:28,760 Speaker 1: sovereign debt as an altima ratio instrument. The other tools 438 00:24:28,800 --> 00:24:32,359 Speaker 1: that you mentioned are much more conventional and in a 439 00:24:32,440 --> 00:24:37,760 Speaker 1: sense from my perspective, UH don't have this same threshold 440 00:24:37,800 --> 00:24:41,639 Speaker 1: in their in their application. But again it's not about 441 00:24:41,760 --> 00:24:44,000 Speaker 1: single instruments. First we have to analyze is there a 442 00:24:44,040 --> 00:24:48,480 Speaker 1: need to act or is monetary policy already expansionary enough 443 00:24:49,840 --> 00:24:52,320 Speaker 1: given the current situation. And then we have to decide 444 00:24:52,320 --> 00:24:55,080 Speaker 1: which instruments to use. So you're open the negative interest rates. 445 00:24:55,680 --> 00:24:59,919 Speaker 1: We already have negative interest rates, and again this is 446 00:25:00,440 --> 00:25:04,560 Speaker 1: I mean, we're moving into uncharted territory. The further we 447 00:25:04,640 --> 00:25:09,680 Speaker 1: moved there, the more we have also carefully consider side 448 00:25:09,680 --> 00:25:14,560 Speaker 1: effects that these measures might create. But in principle, this 449 00:25:14,640 --> 00:25:19,800 Speaker 1: is what central banks do, what they set the interest rates. 450 00:25:20,640 --> 00:25:24,640 Speaker 1: President of the Bundesbank, Sea that was quite frank Frankly, 451 00:25:24,720 --> 00:25:27,560 Speaker 1: that was that was a very direct comments towards and 452 00:25:27,640 --> 00:25:31,679 Speaker 1: slack with us with Deutsche Bank towards and with your perspective, 453 00:25:31,800 --> 00:25:36,760 Speaker 1: in your European perspective, how has the Bundesbank relationship changed 454 00:25:36,800 --> 00:25:39,800 Speaker 1: in the last twenty four months with Frankfurt in the 455 00:25:39,840 --> 00:25:45,359 Speaker 1: e c B. Well, it's I would say that obviously 456 00:25:46,040 --> 00:25:48,920 Speaker 1: Germany is a very important part of the European Union 457 00:25:48,920 --> 00:25:52,040 Speaker 1: and very important part of the ECB decision making, and 458 00:25:52,400 --> 00:25:56,679 Speaker 1: of course it's a critical at this point that we 459 00:25:56,760 --> 00:26:00,000 Speaker 1: had a good debate about, as a white man said, 460 00:26:00,359 --> 00:26:05,120 Speaker 1: do we need more stimulus? What type of stimulus could 461 00:26:05,160 --> 00:26:08,800 Speaker 1: be needed? And most importantly the big experiment of negative 462 00:26:08,840 --> 00:26:15,080 Speaker 1: interest rates, um how much further cannot go without creating 463 00:26:15,840 --> 00:26:20,280 Speaker 1: unintended consequences? And what is the Deutsche Bank Torsten Slock 464 00:26:20,400 --> 00:26:24,560 Speaker 1: view is it? Are negative interest rates, especially in big 465 00:26:24,560 --> 00:26:29,879 Speaker 1: economies like the Eurozone working? Do they need more? I 466 00:26:30,040 --> 00:26:33,160 Speaker 1: have been surprised that they actually has worked so well 467 00:26:33,200 --> 00:26:36,399 Speaker 1: in Denmark, Sweden and Switzerland and also of course to 468 00:26:36,440 --> 00:26:39,760 Speaker 1: the ECB. But up to this point I think the 469 00:26:39,800 --> 00:26:45,240 Speaker 1: conclusion is that it is working. The big question becomes 470 00:26:46,000 --> 00:26:50,000 Speaker 1: now negative interust rates are only modestly negative and minuster 471 00:26:50,160 --> 00:26:54,399 Speaker 1: point seven five, and what if we do push negative 472 00:26:54,440 --> 00:26:58,560 Speaker 1: interust rates much further down? You do start to wonder 473 00:26:59,000 --> 00:27:01,720 Speaker 1: what the plcase could be and if this will be 474 00:27:01,880 --> 00:27:05,800 Speaker 1: as effective as the economic textbook would simply should just 475 00:27:06,400 --> 00:27:09,120 Speaker 1: because economic textbook is very clear. It says just lower 476 00:27:09,200 --> 00:27:11,520 Speaker 1: interest rates, and even if you lower them negatively, that 477 00:27:11,880 --> 00:27:14,840 Speaker 1: should not be a big problem. But the problem, of 478 00:27:14,880 --> 00:27:18,320 Speaker 1: course becomes in particular in the practical discussion of negative 479 00:27:18,320 --> 00:27:22,720 Speaker 1: interest rates. Do you have negative interst rates both for depositors, 480 00:27:22,720 --> 00:27:25,640 Speaker 1: do you have for corporate should you have a two 481 00:27:25,720 --> 00:27:29,679 Speaker 1: tier deposit system? Will people not to react from an 482 00:27:29,680 --> 00:27:32,119 Speaker 1: intensive perspective of negative inist rates? So a lot of 483 00:27:33,160 --> 00:27:38,359 Speaker 1: unanswered questions in this experiment that that's being carried out 484 00:27:38,400 --> 00:27:41,000 Speaker 1: at the moment. Well, let's get back to your research. 485 00:27:41,560 --> 00:27:43,680 Speaker 1: Negative interest rates certainly work if you want to drive 486 00:27:43,720 --> 00:27:46,000 Speaker 1: people away from your currency, as the Danes and the 487 00:27:46,160 --> 00:27:50,480 Speaker 1: Swiss did. But in terms of the theory that it 488 00:27:51,160 --> 00:27:54,639 Speaker 1: boosts lending because banks would rather lend at a small 489 00:27:54,720 --> 00:27:58,719 Speaker 1: positive rate than deposit cash at the at the central 490 00:27:58,760 --> 00:28:01,679 Speaker 1: bank and have to pay for it. Is lending rising? 491 00:28:01,840 --> 00:28:06,520 Speaker 1: Is credit more available now in the euro Zone? So 492 00:28:06,600 --> 00:28:10,439 Speaker 1: the issue becomes that once you cut through zero in 493 00:28:10,560 --> 00:28:13,480 Speaker 1: theory exactly, a should say, Mike, you should see more 494 00:28:13,560 --> 00:28:17,640 Speaker 1: lending because if interest rates a plus fifty basis points 495 00:28:17,640 --> 00:28:21,760 Speaker 1: on minor fifty basis points, that's shouldn't at least create 496 00:28:21,800 --> 00:28:24,520 Speaker 1: a nonlinear effect around zero. But what is a very 497 00:28:24,520 --> 00:28:29,440 Speaker 1: significant nonlinear effect around zero is, of course confidence. There's 498 00:28:29,440 --> 00:28:34,960 Speaker 1: a lot of confidence the confidence issues around whether zero 499 00:28:35,119 --> 00:28:38,400 Speaker 1: is a magic number, and that confidence effect on the 500 00:28:38,440 --> 00:28:41,760 Speaker 1: negative side could mean, in the worst case, that consumers 501 00:28:41,760 --> 00:28:44,200 Speaker 1: and corporates not holding back because they're losing confidence in 502 00:28:44,200 --> 00:28:46,680 Speaker 1: whether this experiment is working or not. It's like, thank 503 00:28:46,680 --> 00:28:50,600 Speaker 1: you so much with your bank and Professor Summers of Harvard, 504 00:28:50,640 --> 00:28:53,720 Speaker 1: Larry Summers has made a huge deal about this overlay 505 00:28:53,800 --> 00:28:59,160 Speaker 1: of confidence upon our monetearing indeed our fiscal certitude as well. 506 00:28:59,200 --> 00:29:01,400 Speaker 1: What we know is, sir, and looking at the bloomberg, 507 00:29:02,560 --> 00:29:04,840 Speaker 1: the down negative one two, the vix up a good 508 00:29:04,840 --> 00:29:08,560 Speaker 1: stick point four eight, one point four eight points twenty 509 00:29:08,640 --> 00:29:12,560 Speaker 1: two point four six sort of captures the angst of 510 00:29:12,640 --> 00:29:15,000 Speaker 1: the morning. I do need to convey that it's a 511 00:29:15,080 --> 00:29:18,360 Speaker 1: lot better than it was two and a half hours ago. 512 00:29:18,480 --> 00:29:23,280 Speaker 1: Looking at Sterling is the immediate proxy one was stunning. 513 00:29:23,720 --> 00:29:26,080 Speaker 1: We've come back with a bit stronger Sterling in the 514 00:29:26,160 --> 00:29:32,240 Speaker 1: last oh ninety minutes one thirty nine fifteen on cable 515 00:29:32,320 --> 00:29:38,840 Speaker 1: this morning. This hour of surveillance is brought to you 516 00:29:38,880 --> 00:29:42,200 Speaker 1: by Volvo Cars, White Planes, visit Voulvo Cars, White Planes 517 00:29:42,280 --> 00:29:45,840 Speaker 1: dot Com. Here's John tuch Well. Donald Trump's dominating victory 518 00:29:45,840 --> 00:29:49,080 Speaker 1: of the Nevada Concusses pushes him further out ahead of 519 00:29:49,120 --> 00:29:52,640 Speaker 1: his nearest competitors for the Republican presidential nomination, giving his 520 00:29:52,880 --> 00:29:56,280 Speaker 1: unorthodox candidacy a major boost, heading it to Super Tuesday 521 00:29:56,320 --> 00:29:59,280 Speaker 1: contest next week. Hillary Clinton doesn't just want to beat 522 00:29:59,280 --> 00:30:02,560 Speaker 1: Bernie Sanders and South Carolina. She wants to beat expectations. 523 00:30:02,560 --> 00:30:05,000 Speaker 1: She is running more than twenty points ahead of Sanders 524 00:30:05,000 --> 00:30:09,280 Speaker 1: and those poles heading into Saturday's Democratic presidential primary, voyed 525 00:30:09,280 --> 00:30:12,960 Speaker 1: by overwhelming support from the state's lack of voters. And 526 00:30:13,040 --> 00:30:16,040 Speaker 1: members of Congress will hear more about the zekea virus 527 00:30:16,160 --> 00:30:20,400 Speaker 1: today has the CDC investigates fourteen new cases and possible 528 00:30:20,760 --> 00:30:24,400 Speaker 1: sexual transmission. The House Oversight Committee will be getting updates 529 00:30:24,440 --> 00:30:27,680 Speaker 1: from the CDC and the National Institutes of Health and 530 00:30:28,000 --> 00:30:32,760 Speaker 1: Uber Technologies starting its very first motorcycle taxi service in Bangkok, 531 00:30:33,080 --> 00:30:35,640 Speaker 1: where a congestion leads to rushing Our traffic speeds in 532 00:30:35,640 --> 00:30:38,480 Speaker 1: the Thailand capital of just about seven miles per hour. 533 00:30:39,360 --> 00:30:41,719 Speaker 1: My town of New Jersey so small, we don't have 534 00:30:41,880 --> 00:30:44,440 Speaker 1: Uber If a guy who drives around at a pickup 535 00:30:44,480 --> 00:30:48,160 Speaker 1: You just jump on the back. His name is Gouber. Gouber. 536 00:30:49,880 --> 00:30:52,480 Speaker 1: It'll be interesting see how over expands out of motorcycle 537 00:30:52,600 --> 00:30:58,239 Speaker 1: into this. Yeah, not there either. Oil West Texas down 538 00:30:58,280 --> 00:31:00,800 Speaker 1: to dollar twenty two. That's a deterior through the morning 539 00:31:01,080 --> 00:31:05,040 Speaker 1: thirty dollars sixty cents. Decidedly not through any level of 540 00:31:05,040 --> 00:31:07,520 Speaker 1: support that we've seen over the last couple of days. 541 00:31:07,640 --> 00:31:12,160 Speaker 1: Brent thirty two fifty two down a lesser amount point 542 00:31:12,480 --> 00:31:16,880 Speaker 1: seven five. This is the greater part of Bloomberg Surveillance. 543 00:31:17,160 --> 00:31:23,520 Speaker 1: Thank you for listening. Stay with us. Bloomberg Surveillance is 544 00:31:23,720 --> 00:31:25,920 Speaker 1: brought to you by Flashing Bank on a complete business 545 00:31:26,000 --> 00:31:28,200 Speaker 1: checking account with fifteen thousand dollars more and get a 546 00:31:28,200 --> 00:31:31,120 Speaker 1: free sixteen gig WiFi tablet. Visit Flushing Bank dot com 547 00:31:31,200 --> 00:31:34,000 Speaker 1: for details, Member f D I C, Equal Housing, Blender, 548 00:31:37,680 --> 00:31:41,040 Speaker 1: Global Business News twenty four hours a day at Bloomberg 549 00:31:41,120 --> 00:31:44,200 Speaker 1: dot com, the Radio plus mobile app and on your radio. 550 00:31:44,480 --> 00:31:48,320 Speaker 1: This is a Bloomberg Business Flash and I'm camerin Moscow. 551 00:31:48,360 --> 00:31:50,920 Speaker 1: This updates brought to you by Sector Spider a t F. 552 00:31:51,000 --> 00:31:53,000 Speaker 1: Why buy a single stock when you can invest in 553 00:31:53,040 --> 00:31:56,640 Speaker 1: the entire sector visits sector spd r s dot com 554 00:31:56,640 --> 00:32:01,320 Speaker 1: are called six sector et F, and stocks this morning 555 00:32:01,440 --> 00:32:04,240 Speaker 1: are moving lower, sliding further from a six week high 556 00:32:04,280 --> 00:32:07,280 Speaker 1: reached on Monday, as following oil prices continue to prey 557 00:32:07,320 --> 00:32:10,560 Speaker 1: on investors global growth concerns, who checked the markets every 558 00:32:10,560 --> 00:32:13,440 Speaker 1: fifteen minutes throughout the trading day. On bloomberg S and 559 00:32:13,480 --> 00:32:15,720 Speaker 1: P five hundred down one point three percent or twenty 560 00:32:15,760 --> 00:32:19,360 Speaker 1: four points to eighteen nineties six Dow Jones Industrial average 561 00:32:19,400 --> 00:32:21,680 Speaker 1: down one point three percent or two hundred twelve points 562 00:32:21,720 --> 00:32:24,720 Speaker 1: to sixteen thousand, two hundred nineteen. Then as Jack down 563 00:32:24,760 --> 00:32:27,200 Speaker 1: one and a half percent or sixty seven points to 564 00:32:27,360 --> 00:32:30,480 Speaker 1: forty four thirty six. Ten Your Treasury up eighteen thirty 565 00:32:30,520 --> 00:32:32,960 Speaker 1: seconds the yield one point six six percent yield on 566 00:32:33,080 --> 00:32:36,120 Speaker 1: the two year point seven zero percent nine max screwed 567 00:32:36,160 --> 00:32:38,080 Speaker 1: oil down three and a half percent or a dollar 568 00:32:38,120 --> 00:32:41,320 Speaker 1: fourteen to thirty dollars seventy three cents of arrel comes 569 00:32:41,360 --> 00:32:43,760 Speaker 1: Gold up two point one percent or twenty five dollars 570 00:32:43,800 --> 00:32:46,960 Speaker 1: fifty cents to twelve forty eight. Ten announced the euro 571 00:32:47,080 --> 00:32:49,360 Speaker 1: a dollar ten O two the N one eleven point 572 00:32:49,480 --> 00:32:53,160 Speaker 1: five one. Treasury Secretary Jack Louse, saying the US wants 573 00:32:53,160 --> 00:32:55,920 Speaker 1: a more serious commitment from other G twenty countries to 574 00:32:56,040 --> 00:33:01,040 Speaker 1: use monetary policy, fiscal measures, and structural reform to stoke demand. 575 00:33:01,360 --> 00:33:03,200 Speaker 1: Lou made the comments ahead of a meeting of a 576 00:33:03,200 --> 00:33:06,240 Speaker 1: group of twenty finance chiefs this week. Fiscal policy can't 577 00:33:06,240 --> 00:33:08,640 Speaker 1: solve all the problems. There are structural issues that need 578 00:33:08,680 --> 00:33:11,840 Speaker 1: to be addressed. Uh some in some countries it's regulatory, 579 00:33:11,960 --> 00:33:15,760 Speaker 1: some countries it's labor markets, and some countries it's financial reform. 580 00:33:15,880 --> 00:33:19,920 Speaker 1: Those structural issues need to be addressed, But fiscal and 581 00:33:19,960 --> 00:33:23,240 Speaker 1: monetary policy are important tools. When used together, they're powerful, 582 00:33:23,280 --> 00:33:26,680 Speaker 1: and that's the message we bring. Louis heard earlier on 583 00:33:26,720 --> 00:33:30,200 Speaker 1: Bloomberg Radio and television, and Lows is lower down three 584 00:33:30,200 --> 00:33:32,760 Speaker 1: and a quarter per cent after posting fourth quarter results 585 00:33:32,800 --> 00:33:36,320 Speaker 1: that trailed home depots, signaling that the retailer isn't benefiting 586 00:33:36,360 --> 00:33:39,600 Speaker 1: as much from the US housing markets gains as it's 587 00:33:39,640 --> 00:33:42,200 Speaker 1: a larger rival. That's a Bloomberg Business flash, Tom and 588 00:33:42,240 --> 00:33:45,360 Speaker 1: Mike Karen thanks so much. Negative to eighteen is Karen 589 00:33:45,400 --> 00:33:48,800 Speaker 1: mentioned in the Dalta Vix point five a quickly Equity 590 00:33:48,800 --> 00:33:52,880 Speaker 1: Markets this morning, odd and Foreign Exchange out across all markets. 591 00:33:53,120 --> 00:33:56,840 Speaker 1: David Wilson, is your world odd, It has its moments. 592 00:33:56,840 --> 00:33:59,600 Speaker 1: I mean, Karen Moscot just mentioned lows and that stockdown 593 00:33:59,720 --> 00:34:02,880 Speaker 1: three point two percent after their fiscal fourth quarter earnings 594 00:34:02,920 --> 00:34:06,680 Speaker 1: only matched analysts average estimate and Bloomberg survey, while rival 595 00:34:06,720 --> 00:34:09,839 Speaker 1: Home Depot came out ahead. We also got numbers out 596 00:34:09,840 --> 00:34:12,600 Speaker 1: of Target and h t j X, the company that 597 00:34:12,600 --> 00:34:15,359 Speaker 1: owns t j Max, Marshalls and Home Goods, and really 598 00:34:15,360 --> 00:34:18,120 Speaker 1: sort of a mixed bag for both, and it's reflected 599 00:34:18,120 --> 00:34:20,560 Speaker 1: in their shares. Target down just three tents of a 600 00:34:20,640 --> 00:34:23,719 Speaker 1: percent at the moment. UH last quarters profit trail the 601 00:34:23,719 --> 00:34:27,320 Speaker 1: average projection because they relied more on price cuts and promotions. 602 00:34:27,320 --> 00:34:29,800 Speaker 1: On the other hand, UH, there are earning squarecast for 603 00:34:29,840 --> 00:34:32,440 Speaker 1: this fiscal year bid beat estimates with with t j 604 00:34:32,800 --> 00:34:36,280 Speaker 1: X really little changed at this point. UH, their fiscal 605 00:34:36,480 --> 00:34:40,280 Speaker 1: year earnings forecast was lower than analysts expected fourth quarter 606 00:34:40,320 --> 00:34:43,840 Speaker 1: though of last year earnings and sales coming out ahead. 607 00:34:43,880 --> 00:34:47,200 Speaker 1: Ford Motor down six point four percent. Another noteworthy move 608 00:34:47,480 --> 00:34:49,360 Speaker 1: you out to make or cut the equivalent cut the 609 00:34:49,400 --> 00:34:52,080 Speaker 1: equivalent of self from hold of credit Swiss, the firm 610 00:34:52,200 --> 00:34:57,279 Speaker 1: sighting over the optimistic sales projections excessive inventories and cost increases. 611 00:34:57,360 --> 00:34:59,480 Speaker 1: And you're seeing a couple of other auto related to 612 00:34:59,520 --> 00:35:01,520 Speaker 1: clients at as well, one of them in Mobile I. 613 00:35:01,960 --> 00:35:04,800 Speaker 1: This is a company and mix software for self driving cars. 614 00:35:05,000 --> 00:35:08,359 Speaker 1: Down about They gave a privit forecast for this year 615 00:35:08,360 --> 00:35:11,360 Speaker 1: that failed to meet estimates. And Avis Budget Group, the 616 00:35:11,400 --> 00:35:15,200 Speaker 1: car rental company down twenty percent. Their earnings forecast for 617 00:35:15,239 --> 00:35:17,239 Speaker 1: this year failed to meet estimates. They talked about a 618 00:35:17,239 --> 00:35:21,440 Speaker 1: stronger dollar and spending to improve customer service. David Wilson, 619 00:35:21,480 --> 00:35:23,200 Speaker 1: thank you so much. Lee Hardman with us he is 620 00:35:23,200 --> 00:35:26,200 Speaker 1: with Bank of Tokyo Mitsubishi. Lee, did you get out 621 00:35:26,239 --> 00:35:28,840 Speaker 1: from under the desk early this morning? How do you 622 00:35:28,920 --> 00:35:34,359 Speaker 1: interpret a drop like that in cable? Yeah? Like you said, Tom, 623 00:35:34,440 --> 00:35:38,440 Speaker 1: it's uh. We're in very volatile times across all um 624 00:35:38,640 --> 00:35:41,759 Speaker 1: foreign exchange markets right now, in particular, the pound is 625 00:35:41,840 --> 00:35:46,160 Speaker 1: very much in the crossfire for the market. The market 626 00:35:46,280 --> 00:35:52,680 Speaker 1: is moving to pricing a higher risk premium ahead of 627 00:35:52,719 --> 00:35:57,239 Speaker 1: the referendum. Is there a one way bet? I mean, 628 00:35:57,400 --> 00:36:03,600 Speaker 1: tell me about the speculation a panster, Yeah, I think 629 00:36:03,680 --> 00:36:06,799 Speaker 1: very much. Though the market has increasingly a one way 630 00:36:06,880 --> 00:36:11,160 Speaker 1: view on sterling ahead of the referendum, with the risk 631 00:36:11,239 --> 00:36:15,560 Speaker 1: seeing very much skewed to the downside. We've already had 632 00:36:15,719 --> 00:36:19,120 Speaker 1: obviously a significant weakening of the pound already this year. 633 00:36:19,160 --> 00:36:22,320 Speaker 1: I think cables down by now almost ten big figures 634 00:36:22,719 --> 00:36:24,839 Speaker 1: since the end of the last year. If we look 635 00:36:24,880 --> 00:36:27,080 Speaker 1: at the pound on a on a trade weighted basis, 636 00:36:27,440 --> 00:36:30,000 Speaker 1: it's still around sort of fifteen percent higher than than 637 00:36:30,040 --> 00:36:33,520 Speaker 1: the lows we saw during the global financial crisis. And 638 00:36:33,560 --> 00:36:37,960 Speaker 1: also if you go back even further than that too, 639 00:36:38,000 --> 00:36:40,840 Speaker 1: after the UK's exit for the from the e r 640 00:36:41,040 --> 00:36:44,600 Speaker 1: M in the early was also about fifteen percent lower 641 00:36:44,640 --> 00:36:47,040 Speaker 1: as well on that occasion. So we still think there's 642 00:36:47,120 --> 00:36:50,560 Speaker 1: the scope before further downside if if a Brexit was 643 00:36:50,600 --> 00:36:53,319 Speaker 1: to materialize. That that's not our base case scenario, but 644 00:36:53,880 --> 00:36:56,880 Speaker 1: I think the market will become increasingly worried of that 645 00:36:56,920 --> 00:37:00,200 Speaker 1: scenario as we moved closer to the referendum. Well, have 646 00:37:00,239 --> 00:37:02,600 Speaker 1: we seen a big move? Are we going to see 647 00:37:02,640 --> 00:37:07,600 Speaker 1: a lot more volatility between now in June? Is are 648 00:37:07,600 --> 00:37:13,359 Speaker 1: we praced into that point or is there still downtime? Well? Yeah, 649 00:37:13,400 --> 00:37:16,640 Speaker 1: I think there's certainly scope for the market tot to 650 00:37:16,880 --> 00:37:21,680 Speaker 1: price in uh an even larger brexit premium ahead of 651 00:37:21,760 --> 00:37:24,640 Speaker 1: the referendum. And like you say, as well, I do 652 00:37:24,760 --> 00:37:27,759 Speaker 1: think as well we will see uh an increase in 653 00:37:28,040 --> 00:37:32,320 Speaker 1: volatility as well for the pound. Obviously increasingly the market 654 00:37:32,400 --> 00:37:36,440 Speaker 1: will be driven um by event. Risk will be obviously 655 00:37:36,600 --> 00:37:41,439 Speaker 1: closely following the incoming opinion polls to see if there's 656 00:37:41,440 --> 00:37:45,560 Speaker 1: any material shifts in public thinking ahead of the referendum. 657 00:37:45,560 --> 00:37:48,879 Speaker 1: And then also this was the other risks such as 658 00:37:48,920 --> 00:37:52,720 Speaker 1: obviously the migration crisis in Europe, and then also perhaps 659 00:37:53,480 --> 00:37:56,520 Speaker 1: even smaller risk perhaps will be potential for another flare 660 00:37:56,560 --> 00:38:00,120 Speaker 1: up in grease. Those kind of things obviously not the 661 00:38:00,160 --> 00:38:02,839 Speaker 1: patent book you could obviously have a negative impact as 662 00:38:02,840 --> 00:38:06,360 Speaker 1: well on on the Brexit risk. When we start talking 663 00:38:06,719 --> 00:38:13,200 Speaker 1: big figure moves like one seven those one point moves, folks, 664 00:38:13,280 --> 00:38:17,960 Speaker 1: is a big figure? Are big figure moves an opportunity 665 00:38:18,360 --> 00:38:22,240 Speaker 1: or are they reason to put on hedges to protect yourself? 666 00:38:22,320 --> 00:38:27,359 Speaker 1: Which is it? Well, I think certain lead would be 667 00:38:27,800 --> 00:38:33,480 Speaker 1: looking to to to protect yourself against the risk of 668 00:38:33,840 --> 00:38:37,399 Speaker 1: a further sharp decline, And in the pound, I think 669 00:38:37,480 --> 00:38:42,360 Speaker 1: certainly the risks are ascued towards further weakness as we 670 00:38:42,480 --> 00:38:48,080 Speaker 1: move forward UM. In terms of the volatility UM certainly 671 00:38:48,160 --> 00:38:51,040 Speaker 1: it's becoming a pace of the pounds decline is becoming 672 00:38:51,320 --> 00:38:54,200 Speaker 1: more rapid, but like I said earlier, we have same 673 00:38:54,239 --> 00:38:57,080 Speaker 1: periods where the pound has even declined even more rapidly 674 00:38:57,480 --> 00:39:01,720 Speaker 1: during the financial crisis period or so after the exit 675 00:39:01,760 --> 00:39:05,400 Speaker 1: from the r M. So yes, historically becoming more extreme 676 00:39:05,400 --> 00:39:09,400 Speaker 1: in terms of altilty, but the potentials if if Brexit 677 00:39:10,160 --> 00:39:12,600 Speaker 1: was to occur, that that you could see an even 678 00:39:12,719 --> 00:39:15,960 Speaker 1: larger spike in volatilty. And I think the risk of Brexit, 679 00:39:16,000 --> 00:39:18,480 Speaker 1: although it's it's it's we think it's it's it's around, 680 00:39:20,200 --> 00:39:23,600 Speaker 1: that's still a fairly material material risk of the market 681 00:39:23,640 --> 00:39:25,640 Speaker 1: will will be we away of, not to go one 682 00:39:25,680 --> 00:39:29,200 Speaker 1: of the sophisticated band, but how far apart are the 683 00:39:29,280 --> 00:39:38,200 Speaker 1: dynamics of sterling dollar versus euro sterling. Well, our view 684 00:39:38,280 --> 00:39:42,640 Speaker 1: has been that the Brexit risk would would post more 685 00:39:42,680 --> 00:39:45,839 Speaker 1: of a downside risk for the pound against the dollar. 686 00:39:45,920 --> 00:39:48,960 Speaker 1: I think that's that's the cleaner cross to to play 687 00:39:49,000 --> 00:39:52,719 Speaker 1: the Brexit risk, because ultimately, if there was to be 688 00:39:53,080 --> 00:39:57,840 Speaker 1: a Brexit event, that would also have some potential negative 689 00:39:57,880 --> 00:40:01,600 Speaker 1: spill over impact on the rest of Europe as well, 690 00:40:01,640 --> 00:40:06,800 Speaker 1: which I could materialize in some offsetting era a weakness. 691 00:40:07,200 --> 00:40:10,359 Speaker 1: I still think you'd see your Sterling likely go up 692 00:40:10,920 --> 00:40:14,680 Speaker 1: towards kind of mid mid eighties, uh, But I would 693 00:40:14,680 --> 00:40:18,240 Speaker 1: affect that pound weakness would be more dampened against against 694 00:40:18,320 --> 00:40:21,000 Speaker 1: the Euro than the stay against the toll of Lee 695 00:40:21,000 --> 00:40:24,319 Speaker 1: Harbin thinking so much Bank Atokyo Minsubishi at this morning, Mike, 696 00:40:24,400 --> 00:40:28,120 Speaker 1: we've got some real market deterioration Apple, just as one example, 697 00:40:28,239 --> 00:40:33,240 Speaker 1: up against support going back to late January nine dollars 698 00:40:33,239 --> 00:40:36,759 Speaker 1: sixty nine cents uh, sort of a ninety two is 699 00:40:37,520 --> 00:40:42,680 Speaker 1: that point earlier. The markets are open, but on a 700 00:40:42,760 --> 00:40:47,080 Speaker 1: futures basis, SP was negative twenty four right now, which 701 00:40:47,120 --> 00:40:49,200 Speaker 1: is not what we saw at the opening. There's there's 702 00:40:49,239 --> 00:40:55,440 Speaker 1: a weight to the market here at We have seen 703 00:40:55,560 --> 00:40:59,799 Speaker 1: this correlation with energy prices for quite some time, and 704 00:41:00,080 --> 00:41:05,800 Speaker 1: watching oil today down but not breaking, not even close 705 00:41:05,840 --> 00:41:09,799 Speaker 1: to resistance at this point. So you gotta wonder, um, 706 00:41:10,120 --> 00:41:13,560 Speaker 1: you know what's driving there's a fear that's developed in 707 00:41:13,560 --> 00:41:16,840 Speaker 1: the last eight hours. It doesn't seem to be related 708 00:41:16,880 --> 00:41:19,320 Speaker 1: to what we've seen in the past. Sterling has rebounded 709 00:41:19,320 --> 00:41:22,000 Speaker 1: off an ugly, ugly morning. Again, that's a glimmer vote, 710 00:41:22,000 --> 00:41:26,319 Speaker 1: but I would note yields her in UH decisively. The 711 00:41:26,440 --> 00:41:30,520 Speaker 1: ten year German again making a move down to recent lows. 712 00:41:30,640 --> 00:41:33,839 Speaker 1: The two year German not quite there yet, but the 713 00:41:33,960 --> 00:41:38,120 Speaker 1: US the tenure yield is in seven big figures, one 714 00:41:38,120 --> 00:41:41,080 Speaker 1: point six six percent. That begins to get my attention. 715 00:41:41,800 --> 00:41:44,719 Speaker 1: Interesting also statistic here I'm looking at. We had a 716 00:41:44,960 --> 00:41:48,279 Speaker 1: little bit of a rally going into this week, and 717 00:41:48,520 --> 00:41:52,520 Speaker 1: volume moved up in general during that period. But now 718 00:41:52,680 --> 00:41:56,640 Speaker 1: we're seeing this decline on lower volume each day, so 719 00:41:56,680 --> 00:41:59,800 Speaker 1: there doesn't seem to be a lot of conviction. Um 720 00:41:59,560 --> 00:42:02,279 Speaker 1: and this gets maybe to what somebody told us not 721 00:42:02,360 --> 00:42:05,160 Speaker 1: long ago, but there are no that we're having a 722 00:42:05,280 --> 00:42:09,319 Speaker 1: lack of buyers. I I well, I strongly agree with 723 00:42:09,320 --> 00:42:13,319 Speaker 1: that that the asymmetric nature going up and going down 724 00:42:13,360 --> 00:42:16,320 Speaker 1: can always be interesting where it's not about selling overtly 725 00:42:16,800 --> 00:42:20,440 Speaker 1: but maybe just about no interest at hand by buyers. 726 00:42:20,480 --> 00:42:23,319 Speaker 1: Whatever it is negative to twenty three on the dell. 727 00:42:23,400 --> 00:42:25,880 Speaker 1: We'll give you extra data checks across all of Bloomberg 728 00:42:25,960 --> 00:42:30,480 Speaker 1: Radio through the day. David Wilson important participant through our 729 00:42:30,560 --> 00:42:35,080 Speaker 1: day on individual equities as well. We are produced in 730 00:42:35,160 --> 00:42:38,680 Speaker 1: New York by y U n Our Global technical director 731 00:42:38,800 --> 00:42:42,880 Speaker 1: Ken fail You. This is Bloomberg Surveillance again. The market 732 00:42:43,280 --> 00:42:44,800 Speaker 1: a negative to twenty four