1 00:00:03,240 --> 00:00:07,840 Speaker 1: Broadcasting live to New York, Bloomberg to Washington, d C, 2 00:00:08,080 --> 00:00:13,320 Speaker 1: Bloomberg to Boston, Bloomberg twelve hundreds to San Francisco, Bloomberg 3 00:00:14,200 --> 00:00:18,360 Speaker 1: to the Country, Channel one ninety and around the globe 4 00:00:18,440 --> 00:00:24,319 Speaker 1: the Bloomberg Radio, Bloomberg dot Com, these Bloomberg Surveillance. Good Morning, 5 00:00:24,360 --> 00:00:26,480 Speaker 1: seven thirty on Wall Street and Michael mc key along 6 00:00:26,560 --> 00:00:29,800 Speaker 1: with Tom King or two hours away from the start 7 00:00:29,880 --> 00:00:32,519 Speaker 1: of what looks like at the moment at least a 8 00:00:32,640 --> 00:00:36,199 Speaker 1: higher open on Wall Streets and news we're watching. In 9 00:00:36,280 --> 00:00:40,280 Speaker 1: the corporate sector, Apple, Amazon testing a news service to 10 00:00:40,320 --> 00:00:43,400 Speaker 1: make it easier for businesses to run artificial intelligence software 11 00:00:43,440 --> 00:00:46,879 Speaker 1: on computers rented from the company, an example of Amazon 12 00:00:47,040 --> 00:00:49,680 Speaker 1: chasing rather than leaning. That's kind of rare. Google's already 13 00:00:49,680 --> 00:00:54,000 Speaker 1: got something like that. IBM, Microsoft and others have already 14 00:00:54,360 --> 00:00:57,840 Speaker 1: also put some of that together. Lenovo fourth quarter profit 15 00:00:57,920 --> 00:01:02,920 Speaker 1: missed analysts estimates, struggling to revive the motor Motorola easy 16 00:01:03,000 --> 00:01:05,520 Speaker 1: for me to say smartphone brand net income a hundred 17 00:01:05,560 --> 00:01:08,080 Speaker 1: eighty million. They were forecast to make a hundred eighty 18 00:01:08,160 --> 00:01:11,040 Speaker 1: four point nine. Uh. There's a story out this morning 19 00:01:11,080 --> 00:01:14,120 Speaker 1: in the Financial Times that apples director Eddie Q and 20 00:01:14,200 --> 00:01:17,920 Speaker 1: Time Warner's head of corporate strategy olaf Olison discussed the 21 00:01:18,040 --> 00:01:21,840 Speaker 1: idea of Apple making a bid for Time Warner, but 22 00:01:22,160 --> 00:01:24,800 Speaker 1: nothing came of it. I'm not sure where we go 23 00:01:25,840 --> 00:01:32,479 Speaker 1: with that. And Gannett out with a advisory to Tribute shareholders, 24 00:01:33,120 --> 00:01:36,640 Speaker 1: suggesting they withhold their votes in connection with the proxy 25 00:01:36,840 --> 00:01:40,360 Speaker 1: fight that the companies are waging over whether they'll be 26 00:01:40,400 --> 00:01:43,000 Speaker 1: allowed to buy them or not. Now, let's check in 27 00:01:43,080 --> 00:01:45,080 Speaker 1: with Michael Barr and get the latest World and the 28 00:01:45,160 --> 00:01:48,160 Speaker 1: national heads. Michael, Mike, thank you very much. President Obama 29 00:01:48,240 --> 00:01:52,360 Speaker 1: says world leaders are rattled by Donald Trump. The President 30 00:01:52,400 --> 00:01:55,200 Speaker 1: mentioned Trump in the news conference today in Japan after 31 00:01:55,320 --> 00:01:58,639 Speaker 1: attending the first working session of the G seven summit. 32 00:01:59,000 --> 00:02:01,760 Speaker 1: The President says G seven leaders are not sure how 33 00:02:01,920 --> 00:02:05,720 Speaker 1: seriously to take some of Trump's pronouncements. The World Health 34 00:02:05,800 --> 00:02:08,959 Speaker 1: Organization says over the past two years, about one thousand 35 00:02:09,040 --> 00:02:12,959 Speaker 1: people have been killed worldwide in attacks on medical facilities 36 00:02:13,280 --> 00:02:17,320 Speaker 1: in conflict zones. Officials in Kansas say a large tornado 37 00:02:17,600 --> 00:02:19,959 Speaker 1: has damaged or destroyed as many as twenty five homes 38 00:02:20,000 --> 00:02:22,320 Speaker 1: in a rural area in the northern part of the state. 39 00:02:22,400 --> 00:02:25,440 Speaker 1: There were no immediate reports of injuries or fatalities. The 40 00:02:25,560 --> 00:02:28,799 Speaker 1: National Weather Service says the twister was on the ground 41 00:02:28,919 --> 00:02:32,360 Speaker 1: for about an hour and a half last night. Emergency 42 00:02:32,440 --> 00:02:34,720 Speaker 1: crews are in Dickinson County to make sure no one 43 00:02:34,760 --> 00:02:37,800 Speaker 1: has trapped. Global News twenty four hours a day, powered 44 00:02:37,880 --> 00:02:40,960 Speaker 1: by our twenty four hundred journalists and more than one 45 00:02:41,000 --> 00:02:43,919 Speaker 1: hundred fifty news bureaus around the world. On Michael Barank. 46 00:02:44,639 --> 00:02:46,880 Speaker 1: Thank you, Michael. Time now for the land Rover Parcipity 47 00:02:46,919 --> 00:02:51,040 Speaker 1: Bloomberg NBC Sports Update with John stash Our. John Alright, Mike. 48 00:02:51,160 --> 00:02:52,960 Speaker 1: It was a climb for the Yankees to get back 49 00:02:52,960 --> 00:02:55,240 Speaker 1: to five hundred eight games under, and as soon as 50 00:02:55,280 --> 00:02:57,440 Speaker 1: they did six wins in a row, they fell back under, 51 00:02:57,480 --> 00:02:59,560 Speaker 1: losing at the Stadium the Toronto eight to four x 52 00:03:00,120 --> 00:03:02,320 Speaker 1: so Martin to home runs his first two of the season, 53 00:03:02,639 --> 00:03:05,799 Speaker 1: first six in the Yankee order, went over for twenty three. C. C. 54 00:03:06,000 --> 00:03:09,639 Speaker 1: Savathi is starting the series finale four o'clock today. That's 55 00:03:09,680 --> 00:03:12,000 Speaker 1: where the Yanks hit the road for ten games. Stephen 56 00:03:12,040 --> 00:03:14,880 Speaker 1: Matts yesterday brilliant the two nut the Mets victory they 57 00:03:14,919 --> 00:03:16,880 Speaker 1: had won them the series in Washington and gets the 58 00:03:16,919 --> 00:03:18,920 Speaker 1: Mets to within a half game at first place. Matts 59 00:03:19,000 --> 00:03:20,480 Speaker 1: was roughed up at his first start of the year, 60 00:03:20,520 --> 00:03:22,839 Speaker 1: but since then seven and oh with the one point 61 00:03:22,960 --> 00:03:25,519 Speaker 1: one three e r A Red Sacks last night beat 62 00:03:25,520 --> 00:03:28,280 Speaker 1: the Rockies. Boston's Jackie Bradley sent in to sitnys freak 63 00:03:28,480 --> 00:03:31,040 Speaker 1: to twenty nine NBA. Another blowout win for the Calves. 64 00:03:31,080 --> 00:03:33,000 Speaker 1: They one of the three home games against Toronto by 65 00:03:33,000 --> 00:03:35,920 Speaker 1: an average of twenty seven point This win by thirty 66 00:03:35,960 --> 00:03:38,600 Speaker 1: eight one sixteen seventy eight. They were by thirty three 67 00:03:38,600 --> 00:03:41,040 Speaker 1: at half time. Cleveland leads three two, with games six 68 00:03:41,120 --> 00:03:43,320 Speaker 1: in Toronto tomorrow. For the first time ever, the San 69 00:03:43,440 --> 00:03:46,040 Speaker 1: Jose Sharks will play for the Stanley Cup put in 70 00:03:46,080 --> 00:03:49,240 Speaker 1: the side pass playoffs disappointments. Sharks beat the Blues five 71 00:03:49,320 --> 00:03:52,040 Speaker 1: two on the Series four two. Cup final begins Monday. 72 00:03:52,080 --> 00:03:55,040 Speaker 1: San josevo face the winner of tonight's Game seven Tampa 73 00:03:55,120 --> 00:03:58,200 Speaker 1: Bay at Pittsburgh were at the Bloomberg NBC Sports Update. 74 00:03:58,280 --> 00:04:02,080 Speaker 1: I'm John Stanshanlos. Thank you John. As we mentioned, it's 75 00:04:02,120 --> 00:04:04,920 Speaker 1: kind of a calm day in the Market's little change 76 00:04:04,960 --> 00:04:07,800 Speaker 1: in the bond market. The dollar index down just to touch, 77 00:04:07,960 --> 00:04:10,600 Speaker 1: but we're keeping an eye on oil prices. Brent Crude 78 00:04:11,040 --> 00:04:19,560 Speaker 1: fifty eighteen cents right now. This is Bloomberg Surveillance. I'm 79 00:04:19,600 --> 00:04:23,320 Speaker 1: Michael McKee along with Tom Keane and futures are suggesting 80 00:04:23,480 --> 00:04:26,800 Speaker 1: we are going to see a higher open SMP features 81 00:04:26,880 --> 00:04:28,680 Speaker 1: up by two points, the tenth of a percent down, 82 00:04:28,680 --> 00:04:31,840 Speaker 1: features up two tenths this morning, twenty eight points. No 83 00:04:32,080 --> 00:04:36,279 Speaker 1: change really for stocks in Europe. Stock six hundred flat 84 00:04:36,520 --> 00:04:39,000 Speaker 1: at the moment. Time Now for the Bloomberg n j 85 00:04:39,160 --> 00:04:41,159 Speaker 1: I T STEM Report, brought to you by New Jersey 86 00:04:41,279 --> 00:04:43,760 Speaker 1: Institute of Technology, investing more than a hundred and ten 87 00:04:43,800 --> 00:04:46,360 Speaker 1: million dollars a year and applied research to solve problems 88 00:04:46,600 --> 00:04:49,440 Speaker 1: and improve life. Learn more at Stories of Innovation dot 89 00:04:49,600 --> 00:04:53,000 Speaker 1: m j I T dot E d U. Here's Bob Michael, 90 00:04:53,000 --> 00:04:56,320 Speaker 1: good morning. Here's what's making news and science, technology, engineering 91 00:04:56,440 --> 00:05:00,360 Speaker 1: and math. When Alphabet chairman Eric Schmith looks to the future, 92 00:05:00,720 --> 00:05:03,839 Speaker 1: he sees breakthroughs in health and technology that will change 93 00:05:03,880 --> 00:05:07,160 Speaker 1: the world. For example, Schmidt said he's looking forward to 94 00:05:07,240 --> 00:05:10,799 Speaker 1: advances in genetics thanks to technology that will improve gene 95 00:05:10,839 --> 00:05:14,680 Speaker 1: sequencing and more personalized and efficient healthcare as the medical 96 00:05:14,760 --> 00:05:19,760 Speaker 1: world becomes increasingly digitized. He spoke at Bloomberg's breakaway conference 97 00:05:19,839 --> 00:05:23,200 Speaker 1: in New York. A new discovery about how clouds form 98 00:05:23,320 --> 00:05:25,880 Speaker 1: may scale back some of the more dire predictions about 99 00:05:25,920 --> 00:05:29,520 Speaker 1: temperature increases caused by man made global warming. That's because 100 00:05:29,600 --> 00:05:32,360 Speaker 1: it implies that a key assumption for making such predictions 101 00:05:32,480 --> 00:05:35,720 Speaker 1: is a bit off. Researcher Jasper Kirby says, nonetheless, we 102 00:05:35,800 --> 00:05:39,320 Speaker 1: are definitely warming the planet. Kirby works at the European 103 00:05:39,360 --> 00:05:42,880 Speaker 1: Center for Nuclear Research or c ERN, near Geneva. He 104 00:05:43,000 --> 00:05:44,880 Speaker 1: is the lead author of one of three studies on 105 00:05:44,960 --> 00:05:47,880 Speaker 1: the topic released by the journal's Nature and Science. The 106 00:05:47,960 --> 00:05:50,800 Speaker 1: new work shows that a combination of cosmic rays from 107 00:05:50,880 --> 00:05:55,280 Speaker 1: space and gases emitted by trees also creates particles and 108 00:05:55,360 --> 00:05:59,960 Speaker 1: then clouds without man made pollution. And that's this morning 109 00:06:00,279 --> 00:06:03,320 Speaker 1: Bloomberg and j I. T. Stem report. Michael, thank you 110 00:06:03,440 --> 00:06:06,080 Speaker 1: very much. It's a good thing. Um. John stash Our 111 00:06:06,640 --> 00:06:09,640 Speaker 1: was a little earlier while Tom's the room, because otherwise 112 00:06:09,720 --> 00:06:12,360 Speaker 1: we'd spend all day talking about Jackie Bradley's twenty nine 113 00:06:12,400 --> 00:06:15,760 Speaker 1: game hitting streak and the fortunes of the Boston Red Sox. Instead, 114 00:06:16,279 --> 00:06:18,160 Speaker 1: we can talk about economy in the markets with Jim 115 00:06:18,240 --> 00:06:25,120 Speaker 1: mcconney's CEO of Principal Global Investors. Um he Tom wants 116 00:06:25,160 --> 00:06:27,880 Speaker 1: to talk to you. Obviously your background is from across 117 00:06:27,920 --> 00:06:30,960 Speaker 1: the pond, but Tom wants to talk to you about Brexit. 118 00:06:31,040 --> 00:06:33,360 Speaker 1: Will save that until he gets back in just a moment. 119 00:06:33,400 --> 00:06:37,280 Speaker 1: I want to start with Jim Bullarden, not what you know, 120 00:06:37,640 --> 00:06:40,479 Speaker 1: whether you think he's right or wrong, but he laid 121 00:06:40,480 --> 00:06:43,000 Speaker 1: out the case for both sides of what the FED 122 00:06:43,120 --> 00:06:46,360 Speaker 1: may do. Uh, And it's really a case of whether 123 00:06:46,400 --> 00:06:49,520 Speaker 1: you want to invest or not. Right now, growth is 124 00:06:49,520 --> 00:06:54,080 Speaker 1: pretty slow and inflation expectations are low, but inflation itself 125 00:06:54,200 --> 00:06:58,039 Speaker 1: is rising. Labor markets are strong, Global headwinds have dropped, 126 00:06:58,920 --> 00:07:03,160 Speaker 1: which predominates in your mind in terms of deciding what 127 00:07:03,320 --> 00:07:07,720 Speaker 1: you should do. Mike, you know, the problem here is 128 00:07:07,800 --> 00:07:10,920 Speaker 1: that most economic commentators, including the analysts that the FED, 129 00:07:11,280 --> 00:07:15,280 Speaker 1: are extremely confused. As you said, confused. Growth is very 130 00:07:15,560 --> 00:07:17,760 Speaker 1: part of it. I don't know about that, but growth 131 00:07:17,880 --> 00:07:20,440 Speaker 1: is very slow. You know, the first quarter GDP point 132 00:07:20,520 --> 00:07:23,320 Speaker 1: five percent, that's stall speed, and yet the labor mark 133 00:07:23,440 --> 00:07:26,080 Speaker 1: is behaving as if the economy is growing at two 134 00:07:26,160 --> 00:07:29,760 Speaker 1: to three. You then have the situation where don't forget 135 00:07:29,920 --> 00:07:35,240 Speaker 1: on capital investment you have companies flush with cash, really 136 00:07:35,360 --> 00:07:39,120 Speaker 1: very profitable, but not invest in capital. Why is that. 137 00:07:39,720 --> 00:07:42,160 Speaker 1: I think the answer to those two paradoxes and many 138 00:07:42,240 --> 00:07:45,480 Speaker 1: others is in technology. You know, it's no coincidence. In 139 00:07:45,520 --> 00:07:47,600 Speaker 1: the last ten minutes you've been talking about all kinds 140 00:07:47,640 --> 00:07:50,640 Speaker 1: of technology, whether it's from Google to Time Warner, an Apple, 141 00:07:50,720 --> 00:07:55,760 Speaker 1: to STEM to stem research. You know, the whole business 142 00:07:55,920 --> 00:07:58,280 Speaker 1: of technology in the last seven or eight years has 143 00:07:58,320 --> 00:08:01,800 Speaker 1: revolutionized the economy. You've got the sharing economy, You've got 144 00:08:01,960 --> 00:08:06,440 Speaker 1: higher automation, you've got better product quality. I'll give you 145 00:08:06,480 --> 00:08:11,120 Speaker 1: a small anecdote. All the all the all the collision 146 00:08:11,800 --> 00:08:15,680 Speaker 1: avoidance technology getting cars now means they get less damage, 147 00:08:15,760 --> 00:08:18,480 Speaker 1: they bump into stuff less. What does that mean? It 148 00:08:18,600 --> 00:08:21,000 Speaker 1: means that the cost of ownership has come right down. 149 00:08:21,440 --> 00:08:25,200 Speaker 1: That's deflation. So from hints like that, I come to 150 00:08:25,240 --> 00:08:27,200 Speaker 1: the view that the answer to the paradox, at least 151 00:08:27,240 --> 00:08:30,760 Speaker 1: in part, is that the economy is a bit healthier 152 00:08:30,800 --> 00:08:35,960 Speaker 1: than GDP numbers suggest that the GDP deflator is probably 153 00:08:36,080 --> 00:08:40,240 Speaker 1: wrong because product quality is improving and costs of doing 154 00:08:40,360 --> 00:08:43,600 Speaker 1: things are coming down with technology. So what I think 155 00:08:43,640 --> 00:08:46,880 Speaker 1: that means. I think it means that the idea that 156 00:08:47,040 --> 00:08:50,120 Speaker 1: the FED should normalize pretty soon on rates is the 157 00:08:50,240 --> 00:08:53,480 Speaker 1: right answer, And I think that the push to get 158 00:08:53,520 --> 00:08:55,840 Speaker 1: inflation going, you know, the central banks around the world 159 00:08:55,880 --> 00:08:59,679 Speaker 1: that's so enthusiastic about inflation, I think they're mistaken, and 160 00:08:59,840 --> 00:09:02,400 Speaker 1: I think that that could lead to some very bad results. 161 00:09:03,280 --> 00:09:07,319 Speaker 1: But from an investor's point of view, if technology is 162 00:09:07,679 --> 00:09:11,480 Speaker 1: improving things, then shouldn't we see living standards rise, and 163 00:09:12,280 --> 00:09:16,880 Speaker 1: from an investor's point of view, topline growth rising. I 164 00:09:17,000 --> 00:09:19,920 Speaker 1: think that the only reason we don't think living standards 165 00:09:19,960 --> 00:09:22,559 Speaker 1: are rising is the way we measure it. You know, 166 00:09:22,640 --> 00:09:24,880 Speaker 1: if you look at the television you have in your 167 00:09:24,920 --> 00:09:27,040 Speaker 1: home now compared with five years ago, it does so 168 00:09:27,200 --> 00:09:30,840 Speaker 1: much more. It will do things like streaming movies, which 169 00:09:31,040 --> 00:09:33,440 Speaker 1: wasn't the case as recently as five and certainly ten 170 00:09:33,559 --> 00:09:37,880 Speaker 1: years ago. That's fast WiFi plus better products, plus better 171 00:09:38,000 --> 00:09:43,200 Speaker 1: distribution of content. Those things are genuinely raising people's living 172 00:09:43,280 --> 00:09:46,520 Speaker 1: standards in a way that doesn't get properly measured. So 173 00:09:46,600 --> 00:09:49,400 Speaker 1: I'm of the view that actually living standards are probably 174 00:09:49,559 --> 00:09:53,120 Speaker 1: rising faster than most people think. There is, of course, 175 00:09:53,240 --> 00:09:57,520 Speaker 1: the political question of populism and people feeling bitter and angry. 176 00:09:58,000 --> 00:10:00,880 Speaker 1: Um that's a whole separate argument. But I do think 177 00:10:01,400 --> 00:10:04,800 Speaker 1: on pure living standards, we're probably doing better than most 178 00:10:04,840 --> 00:10:09,080 Speaker 1: people about growth, top line top line growth. UM. I've 179 00:10:09,200 --> 00:10:13,280 Speaker 1: had conversations about this with much smarter economists than me, 180 00:10:13,920 --> 00:10:16,760 Speaker 1: and the conclusion I got out of that was, well, 181 00:10:16,880 --> 00:10:19,000 Speaker 1: let's look at theh nomenal, not the real GDP. If 182 00:10:19,040 --> 00:10:21,439 Speaker 1: we don't trust the real GDP, and if you look 183 00:10:21,480 --> 00:10:23,640 Speaker 1: at it that way, you know the economy is not 184 00:10:23,760 --> 00:10:26,160 Speaker 1: growing very fast, but it's not growing at point five. 185 00:10:26,280 --> 00:10:28,199 Speaker 1: Maybe it really grew it too if you did a 186 00:10:28,280 --> 00:10:32,880 Speaker 1: proper quality adjustment to the GDP deflator. Jim mcconnis was 187 00:10:33,040 --> 00:10:38,520 Speaker 1: from the Principal Global Investors Group and will continue our conversation. UM. 188 00:10:39,440 --> 00:10:41,880 Speaker 1: Tom may be interested to find out what you had 189 00:10:41,920 --> 00:10:45,520 Speaker 1: to say about the TVs. He's still waiting for color 190 00:10:45,720 --> 00:10:50,319 Speaker 1: to be invented on his television. We don't want to 191 00:10:50,360 --> 00:10:53,960 Speaker 1: tell his kids don't want a new TV. Right now, 192 00:10:54,040 --> 00:11:02,360 Speaker 1: we're watching futures move higher. This is Bloomberg surveillance. Bloomberg 193 00:11:02,400 --> 00:11:04,959 Speaker 1: Surveillance is brought to you by the Jeep Grand Cherokee, 194 00:11:05,000 --> 00:11:07,319 Speaker 1: the most awarded suv ever. The Grand Cherokee continues to 195 00:11:07,360 --> 00:11:09,920 Speaker 1: raise the bar with its luxurious interior and legendary four 196 00:11:09,960 --> 00:11:12,880 Speaker 1: by four capability. Drive one at your local JEF dealer. Today, 197 00:11:17,000 --> 00:11:20,319 Speaker 1: Global business news twenty four hours a day. If Bloomberg 198 00:11:20,360 --> 00:11:23,440 Speaker 1: dot Com the radio plus mobile act and on your radio, 199 00:11:23,760 --> 00:11:27,680 Speaker 1: this is a Bloomberg Business flash and I'm covered at Moscow. 200 00:11:27,800 --> 00:11:30,360 Speaker 1: This updates brought to you by Commonwealth Financial Network. When 201 00:11:30,400 --> 00:11:32,600 Speaker 1: it's time to change the conversation, talk with a broker 202 00:11:32,679 --> 00:11:35,240 Speaker 1: dealer r I A that's ready to listen Call six 203 00:11:35,320 --> 00:11:37,719 Speaker 1: six four six two thirty six thirty eight or is 204 00:11:37,760 --> 00:11:41,400 Speaker 1: it Commonwealth dot Com to learn more. Brent and West 205 00:11:41,440 --> 00:11:44,240 Speaker 1: Texas Intermediate rising about fifty dollars of barrel for the 206 00:11:44,320 --> 00:11:46,400 Speaker 1: first time in more than six months, is a decline 207 00:11:46,400 --> 00:11:49,800 Speaker 1: in US stockpiles accelerates a rebound from a twelve year low. 208 00:11:50,040 --> 00:11:52,640 Speaker 1: To check the markets every fifteen minutes throughout the trading 209 00:11:52,720 --> 00:11:56,160 Speaker 1: day on Bloomberg Nimax. Scrude oil is up one percent 210 00:11:56,240 --> 00:11:58,959 Speaker 1: of fifty cents right now at fifty six cents of barrel, 211 00:11:59,000 --> 00:12:01,520 Speaker 1: while Brent is up tenths per cent, or forty five 212 00:12:01,600 --> 00:12:05,720 Speaker 1: cents at fifty dollars nineteen cents. Futures are higher. SNP 213 00:12:05,880 --> 00:12:08,400 Speaker 1: Emity futures of three and a half points, Dowie Mini 214 00:12:08,480 --> 00:12:10,839 Speaker 1: futures of thirty nine and NAS Docu mini futures of 215 00:12:11,000 --> 00:12:13,320 Speaker 1: nine and a half. The docks in Germany's up seven 216 00:12:13,360 --> 00:12:16,240 Speaker 1: tenths per cent. Can your treasury a little change yield 217 00:12:16,320 --> 00:12:18,959 Speaker 1: one point eight six per set Comics gold is a 218 00:12:19,080 --> 00:12:21,319 Speaker 1: four tenths per cent or four dollar seventy cents to 219 00:12:21,360 --> 00:12:24,480 Speaker 1: twelve thirty one ten announced the euro a dollar eleven 220 00:12:24,600 --> 00:12:28,560 Speaker 1: seventy three The yin one ten point oh eight. Time 221 00:12:28,600 --> 00:12:30,920 Speaker 1: Warner up one point nine percent in early training after 222 00:12:30,960 --> 00:12:34,200 Speaker 1: The Financial Times reported that a top Apple executive raised 223 00:12:34,240 --> 00:12:36,959 Speaker 1: the prospect of buying the owner of HBO, CNN and 224 00:12:37,040 --> 00:12:40,240 Speaker 1: Warner Brothers. Last year Netflix of two percent, as the 225 00:12:40,320 --> 00:12:44,920 Speaker 1: discussions underline Apple's interest in media and potentially offering its 226 00:12:44,960 --> 00:12:48,520 Speaker 1: own content and costco wholesale, posting third quarter earnings that 227 00:12:48,640 --> 00:12:52,000 Speaker 1: beat analysts estimates after the Warehouse club curtailed costs. And 228 00:12:52,080 --> 00:12:57,920 Speaker 1: that's a Bloomberg business flash. The Brexit vote coverage on 229 00:12:58,040 --> 00:13:02,480 Speaker 1: Bloomberg Radio. It is not an Alabama accent. You're here, 230 00:13:02,679 --> 00:13:06,040 Speaker 1: It is the West Highlands of Scotland and Jim mccon's voice, 231 00:13:06,080 --> 00:13:08,959 Speaker 1: he's got a bachelor's degree in mathematics also from the 232 00:13:09,040 --> 00:13:12,680 Speaker 1: University of Cambridge, which you can hear in his voice 233 00:13:12,840 --> 00:13:15,920 Speaker 1: as well. So he's the perfect person to ask because 234 00:13:15,960 --> 00:13:18,439 Speaker 1: he did his own Brexit and left the country to 235 00:13:18,520 --> 00:13:23,920 Speaker 1: come here and be the CEO of Principal Global Investors. Uh. 236 00:13:24,640 --> 00:13:27,760 Speaker 1: The big question for when we were talking about Jim 237 00:13:27,800 --> 00:13:30,320 Speaker 1: Boward and the FED for the FED wine they need, 238 00:13:30,440 --> 00:13:32,400 Speaker 1: and it will be a question for the European Central 239 00:13:32,400 --> 00:13:35,920 Speaker 1: Bank and others, is what impact would a vote to 240 00:13:36,080 --> 00:13:39,720 Speaker 1: leave the European Union have on markets around the world. 241 00:13:39,960 --> 00:13:41,640 Speaker 1: And you have a couple of views. I mean, the 242 00:13:42,559 --> 00:13:46,360 Speaker 1: pro Remain group argues that it would be a disaster 243 00:13:46,720 --> 00:13:49,800 Speaker 1: and we could have global calamity. FED officials lately have 244 00:13:49,880 --> 00:13:55,520 Speaker 1: been relatively sanguine about the knockout effects. What's your read, Well, 245 00:13:55,559 --> 00:13:57,800 Speaker 1: it's very hard to tell what would happen immediately. A 246 00:13:57,840 --> 00:14:00,319 Speaker 1: lot would depend on the news around it. But I 247 00:14:00,400 --> 00:14:04,559 Speaker 1: tend to focus on the long term context of this. 248 00:14:05,360 --> 00:14:09,160 Speaker 1: And you know, Brexit, if they vote to exit, would 249 00:14:09,160 --> 00:14:12,679 Speaker 1: definitely be a vote against free trade, a vote against globalization. 250 00:14:13,400 --> 00:14:16,880 Speaker 1: It would be let's have our independence, let's be self determining, 251 00:14:17,200 --> 00:14:20,160 Speaker 1: even if it hurts our economy a bit that essentially 252 00:14:20,320 --> 00:14:22,280 Speaker 1: is I think if you try and treat it calmly, 253 00:14:22,360 --> 00:14:25,080 Speaker 1: what they'd be saying. It's a little bit like I 254 00:14:25,120 --> 00:14:28,200 Speaker 1: actually think there's a big transatlantic residence here because the 255 00:14:28,280 --> 00:14:30,840 Speaker 1: people who for Brexit are very similar to the people 256 00:14:30,920 --> 00:14:34,280 Speaker 1: for her Trump. That you could have a situation where 257 00:14:34,280 --> 00:14:37,120 Speaker 1: you get Brexit and President Trump and both sides of 258 00:14:37,120 --> 00:14:40,000 Speaker 1: the Atlantic suddenly shut down free trade. That I think 259 00:14:40,000 --> 00:14:42,480 Speaker 1: would be very bad. And if that's the prospect, I 260 00:14:42,560 --> 00:14:46,240 Speaker 1: think markets could definitely suffer. When you were at Pembroke College, 261 00:14:46,480 --> 00:14:49,520 Speaker 1: which folks, is just to bring it to clarity something 262 00:14:49,600 --> 00:14:52,160 Speaker 1: out of Harry Potter, were you ever threatened with being 263 00:14:52,200 --> 00:14:54,760 Speaker 1: burned at the stake? Um? You know, did you get 264 00:14:54,800 --> 00:14:57,680 Speaker 1: like a see in you know power functions or tailor 265 00:14:57,760 --> 00:15:01,200 Speaker 1: equations and in they said we'll burn you at the 266 00:15:01,240 --> 00:15:05,600 Speaker 1: stake Not to my recollection? Recollection do you think of 267 00:15:06,280 --> 00:15:08,320 Speaker 1: people may have threatened me behind my back? But no. 268 00:15:08,680 --> 00:15:11,840 Speaker 1: But but where you were in school, Ridley walk, in 269 00:15:11,920 --> 00:15:14,720 Speaker 1: the croquet field and all that at Pembroke is the 270 00:15:14,920 --> 00:15:18,200 Speaker 1: heart of medieval or late medieval England are called it 271 00:15:18,240 --> 00:15:21,600 Speaker 1: almost modern England, and in so much of the Brexit 272 00:15:21,680 --> 00:15:24,400 Speaker 1: coverage that I see now, it's elite business people on 273 00:15:24,520 --> 00:15:28,840 Speaker 1: both sides jaw boning about elite business angles. What is 274 00:15:28,920 --> 00:15:32,840 Speaker 1: your sense of what the people of England want. I 275 00:15:32,920 --> 00:15:36,080 Speaker 1: can't get a straight answer on that. Yeah, the people 276 00:15:36,160 --> 00:15:40,520 Speaker 1: of the people in England are basically pretty open to 277 00:15:41,080 --> 00:15:44,000 Speaker 1: the rest of the world. I mean, even even if 278 00:15:44,040 --> 00:15:46,560 Speaker 1: you go back to Empire, the British Empire was about 279 00:15:46,600 --> 00:15:49,680 Speaker 1: free trade. It wasn't about ruling these foreign countries. It 280 00:15:49,800 --> 00:15:52,440 Speaker 1: was about trading with them and doing economics. Can Britain 281 00:15:52,520 --> 00:15:55,520 Speaker 1: go back to that? I mean, is there to to 282 00:15:55,680 --> 00:15:59,240 Speaker 1: the point of Mr Johnson and m Gerard Lyons in 283 00:15:59,320 --> 00:16:02,680 Speaker 1: the Sunday Time Times a few weeks ago, what's wrong 284 00:16:02,760 --> 00:16:05,360 Speaker 1: with that? I think what's wrong with that is that 285 00:16:06,200 --> 00:16:09,560 Speaker 1: the trading world is now much bigger and much more 286 00:16:09,760 --> 00:16:13,720 Speaker 1: multi centered than it used to be. And I think that, Um, 287 00:16:14,240 --> 00:16:16,600 Speaker 1: you know, it's fine to say that countries trade with 288 00:16:16,720 --> 00:16:20,160 Speaker 1: the EU without a without a trade deal, that is true, 289 00:16:20,640 --> 00:16:23,320 Speaker 1: But they trade with their hands tied behind their back, 290 00:16:23,680 --> 00:16:26,680 Speaker 1: without the product acceptance that you get by being part 291 00:16:26,720 --> 00:16:29,720 Speaker 1: of the single market. And you know, so, I think 292 00:16:29,760 --> 00:16:33,480 Speaker 1: the truth there is that the people in Britain don't 293 00:16:33,560 --> 00:16:36,320 Speaker 1: really see it that way, but they're seeing their own 294 00:16:36,920 --> 00:16:41,200 Speaker 1: prosperity and they're seeing a lot of jobs taken by immigrants. 295 00:16:41,280 --> 00:16:45,320 Speaker 1: In their perception, immigration has gone up very, very sharply, 296 00:16:45,840 --> 00:16:50,360 Speaker 1: which is inciting both some bigger trade which is mercifully 297 00:16:50,600 --> 00:16:53,520 Speaker 1: rare than it used to be, but also some feeling 298 00:16:53,560 --> 00:16:57,000 Speaker 1: of being economically threatened. So I think immigration is the 299 00:16:57,040 --> 00:16:59,880 Speaker 1: biggest single issue that will move most people. And I 300 00:17:00,080 --> 00:17:04,440 Speaker 1: think that the the the debate is going away from 301 00:17:04,720 --> 00:17:07,080 Speaker 1: Brexit at the moment. I thought it was fifty a 302 00:17:07,160 --> 00:17:11,240 Speaker 1: month ago, and I think it's something like against Brexit. 303 00:17:11,320 --> 00:17:13,600 Speaker 1: I think remain as they're now calling it as the 304 00:17:13,640 --> 00:17:17,440 Speaker 1: more likely outturn. But I think that that is because 305 00:17:17,960 --> 00:17:21,359 Speaker 1: of a combination of fears of the negative impact on jobs, 306 00:17:21,440 --> 00:17:24,239 Speaker 1: which you know is there whatever you say, it's if 307 00:17:24,280 --> 00:17:27,000 Speaker 1: you cut back trade, you cut back jobs, and maybe 308 00:17:27,160 --> 00:17:31,400 Speaker 1: that in many parts of particularly England, immigration is maybe 309 00:17:31,440 --> 00:17:33,720 Speaker 1: not as bad as some people have put up sentiment 310 00:17:33,800 --> 00:17:39,040 Speaker 1: to see it. Is there any consensus And I asked 311 00:17:39,080 --> 00:17:42,639 Speaker 1: you about the effect on markets worldwide, but on what 312 00:17:42,840 --> 00:17:47,240 Speaker 1: you might or might not add by in England, I 313 00:17:47,359 --> 00:17:51,080 Speaker 1: think that almost anything is a little bit of a 314 00:17:51,200 --> 00:17:56,040 Speaker 1: bet on Brexit, because the second half of the year 315 00:17:56,880 --> 00:17:59,680 Speaker 1: if they go for exit, would see a lot of uncertainty. 316 00:17:59,840 --> 00:18:03,760 Speaker 1: But how trade is organized, and remember, particularly when you 317 00:18:03,840 --> 00:18:06,760 Speaker 1: take into account imports and exports to the European Union, 318 00:18:07,160 --> 00:18:09,800 Speaker 1: Britain remains one of the most open economies in the world. 319 00:18:10,280 --> 00:18:12,600 Speaker 1: So anything that will and if they get the deal 320 00:18:12,720 --> 00:18:16,199 Speaker 1: with with access to the access to the Single Market, 321 00:18:16,800 --> 00:18:19,120 Speaker 1: you know, the Norway deal. If they get that, then 322 00:18:19,200 --> 00:18:22,159 Speaker 1: the markets will probably be okay but not great in 323 00:18:22,200 --> 00:18:24,640 Speaker 1: the second half of the year. If they don't get 324 00:18:24,720 --> 00:18:27,680 Speaker 1: that deal, and if, as seems likely to me, the 325 00:18:27,800 --> 00:18:31,040 Speaker 1: negotiations start off pretty rough, then I think the second 326 00:18:31,080 --> 00:18:32,760 Speaker 1: half of the year would not be good for almost 327 00:18:32,840 --> 00:18:36,040 Speaker 1: anything in the UK market. Having said all that, there'll 328 00:18:36,080 --> 00:18:38,760 Speaker 1: be a relief bounce if, as most likely, they go 329 00:18:38,920 --> 00:18:42,159 Speaker 1: for remain. Well, let's broaden that out a little bit 330 00:18:42,280 --> 00:18:44,200 Speaker 1: and go back to what you said earlier about it 331 00:18:44,280 --> 00:18:48,200 Speaker 1: reminds you of Trump and protectionism. What's is there a 332 00:18:48,280 --> 00:18:52,040 Speaker 1: defensive posture and investors should take if it looks like 333 00:18:52,480 --> 00:18:56,840 Speaker 1: Donald Trump might win the presidency. Um, I think that 334 00:18:57,440 --> 00:19:03,120 Speaker 1: if that happens, you're going to to see multinationals, imports 335 00:19:03,160 --> 00:19:08,960 Speaker 1: and exports looking quite shaky. However, remember Mr Trump has 336 00:19:09,000 --> 00:19:12,960 Speaker 1: a track record of being very pragmatic and may not 337 00:19:13,160 --> 00:19:15,920 Speaker 1: follow through some of the rhetoric if it turns really damaging. 338 00:19:16,400 --> 00:19:18,000 Speaker 1: So I think what you're seeing is a lot of 339 00:19:18,119 --> 00:19:21,720 Speaker 1: uncertainty about what you actually do. He is pragmatic, that's 340 00:19:21,760 --> 00:19:24,159 Speaker 1: the positive. He said some things that would be very 341 00:19:24,200 --> 00:19:28,159 Speaker 1: bad for business if enacted. That's the negative. But I 342 00:19:28,240 --> 00:19:31,080 Speaker 1: think that if you're going to be defensive, you're looking 343 00:19:31,160 --> 00:19:34,480 Speaker 1: at an economy growing less than you might have thought, 344 00:19:34,560 --> 00:19:37,879 Speaker 1: which would tend to be safe assets, whatever those are. 345 00:19:38,440 --> 00:19:41,840 Speaker 1: You know, he maybe before he starts, before a Trump 346 00:19:41,880 --> 00:19:45,200 Speaker 1: administration starts borrowing a lot, you at least stick with 347 00:19:45,240 --> 00:19:49,080 Speaker 1: a treasury market and high quality bond. He could DeVault 348 00:19:49,160 --> 00:19:53,080 Speaker 1: our treasury he does, But I don't think that's the 349 00:19:53,119 --> 00:19:56,800 Speaker 1: point about uncertainty, Mike. You know, he does say that, Um, 350 00:19:57,920 --> 00:20:00,360 Speaker 1: is that a sensible thing to say? Not really, because 351 00:20:00,400 --> 00:20:03,240 Speaker 1: if you default on treasuries, you bring down all the 352 00:20:03,480 --> 00:20:07,000 Speaker 1: things that are supported on treasury collateral. Let's bring in 353 00:20:07,080 --> 00:20:09,920 Speaker 1: your mathematics. Peter book Vart, the Lindsay Group just publishing 354 00:20:10,000 --> 00:20:12,520 Speaker 1: a brilliant note on mood out there in the equity markets. 355 00:20:13,040 --> 00:20:16,760 Speaker 1: I don't know, not bullish, not bearish, I don't know, 356 00:20:17,040 --> 00:20:21,760 Speaker 1: goes back six year high. I don't know. In your 357 00:20:21,800 --> 00:20:25,240 Speaker 1: world a X plus b y plus ez plus this 358 00:20:25,359 --> 00:20:28,680 Speaker 1: thing called epsilon of the right inside the epsilon is 359 00:20:28,720 --> 00:20:32,480 Speaker 1: off the chart. How should our listeners invest with the 360 00:20:32,680 --> 00:20:35,600 Speaker 1: I don't know that we have right now? The I 361 00:20:35,760 --> 00:20:39,639 Speaker 1: don't know has led to a very negative feeling in 362 00:20:39,800 --> 00:20:43,760 Speaker 1: markets over the last two or three years. Equity is 363 00:20:43,840 --> 00:20:47,760 Speaker 1: hitting new all time highs at one point recently, but 364 00:20:47,840 --> 00:20:50,399 Speaker 1: nobody felt confident. That is not the end of a 365 00:20:50,480 --> 00:20:54,160 Speaker 1: bull market. It's when more when more people are fearful 366 00:20:54,200 --> 00:20:57,679 Speaker 1: than our enthusiastic, there is still some juice in the market, 367 00:20:58,080 --> 00:21:01,000 Speaker 1: which is why based on that would I have been 368 00:21:01,119 --> 00:21:03,639 Speaker 1: saying that US equities are buy on setbacks, and I 369 00:21:03,760 --> 00:21:05,920 Speaker 1: continue to believe. How do you know which way you 370 00:21:06,040 --> 00:21:08,680 Speaker 1: come out of a range bound market? Well, you don't. 371 00:21:08,840 --> 00:21:10,800 Speaker 1: On the next post, you don't know. You really don't know. 372 00:21:11,040 --> 00:21:13,639 Speaker 1: Looking forward, you gotta wait. But my guess is that 373 00:21:13,840 --> 00:21:17,119 Speaker 1: valuations are not bad, that many good things are happening 374 00:21:17,119 --> 00:21:19,720 Speaker 1: in the economy. Sumer stocks are priced to perfection. It's 375 00:21:19,720 --> 00:21:22,760 Speaker 1: like a nifty fifty thing. Not not really tom because 376 00:21:22,800 --> 00:21:25,400 Speaker 1: the s and P five hundreds on about sixteen seventeen 377 00:21:25,440 --> 00:21:28,440 Speaker 1: times earnings. That's an earnings yield over five at a 378 00:21:28,520 --> 00:21:31,000 Speaker 1: time when the ten year yields under two. That doesn't 379 00:21:31,000 --> 00:21:33,560 Speaker 1: seem too bad to me. So I don't see it 380 00:21:33,640 --> 00:21:36,000 Speaker 1: as price for perfection. Price for perfection is when you 381 00:21:36,119 --> 00:21:39,760 Speaker 1: get to the situation in d when there were a 382 00:21:39,800 --> 00:21:43,280 Speaker 1: lot of stocks on fifty times. So some will say 383 00:21:43,720 --> 00:21:46,080 Speaker 1: that that stocks a price for perfection, but I don't 384 00:21:46,119 --> 00:21:50,760 Speaker 1: really believe that. Jim mcclown, thank you so much, greatly appreciative, 385 00:21:50,800 --> 00:21:54,920 Speaker 1: Thank you, Mike. This was just fabulous. Yes, it's always great. 386 00:21:55,080 --> 00:21:56,720 Speaker 1: On Brexit, I mean, we're we don't know what to 387 00:21:56,760 --> 00:21:58,720 Speaker 1: do with Brexit. Mike and I are sort of I 388 00:21:58,800 --> 00:22:02,240 Speaker 1: feel very removed, like from the debate on Broxit. I 389 00:22:02,320 --> 00:22:05,400 Speaker 1: don't feel like I'm qualified to judge the British people. 390 00:22:05,600 --> 00:22:07,240 Speaker 1: Now we're gonna have to go over there and find 391 00:22:07,280 --> 00:22:11,719 Speaker 1: out for ourselves. Very good Jim McLean with the principal 392 00:22:11,760 --> 00:22:14,360 Speaker 1: group on the mathematics at the moment. Thank you Peter 393 00:22:14,440 --> 00:22:17,359 Speaker 1: book for for that research. Note the Lindsay group, I 394 00:22:17,440 --> 00:22:20,399 Speaker 1: don't know at a twenty six year high. What I 395 00:22:20,520 --> 00:22:24,080 Speaker 1: do know is we have another hour of Bloomberg surveillance 396 00:22:24,119 --> 00:22:26,119 Speaker 1: worldwide and coast to coast