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Speaker 1: Broadcasting live to New York, Bloomberg to Washington, d C,

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Speaker 1: Bloomberg to Boston, Bloomberg twelve on its to San Francisco,

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Speaker 1: Bloomberg to the Country General one ninety and around the

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Speaker 1: globe the Bloomberg Radio plus Bloomberg dot Com. This is

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Speaker 1: Bloomberg Surveillance. Good Morning seven on Wall Street and Michael McKee,

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Speaker 1: along with Tom Keene JP Morgan Chase reporting today the

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Speaker 1: first of the financials out with their results for the

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Speaker 1: first quarter. Not good. First quarter profit fell six point

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Speaker 1: seven percent, lower trading, lower investment banking revenue. However, cutting

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Speaker 1: costs enabled Jamie Diamond to a report earnings per share

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Speaker 1: of a dollar thirty five, better than the dollar twenty

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Speaker 1: four that had been the consensus forecast, and JP Morgan

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Speaker 1: shares in pre market trading are up two point six

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Speaker 1: percent because you know, well, because US call company Peabody

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Speaker 1: Energy filing for bankruptcy a sharpfalling coal prices leaving it

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Speaker 1: unable to keep up the debt payments that financed its

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Speaker 1: expansion into Australia. That stock down seventy two percent. Obviously,

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Speaker 1: if they are granted bankruptcy, it will go to zero

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Speaker 1: McCormick abandoning takeover talks with Premier Foods. The UK company

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Speaker 1: demands too high a price, they say Premiere Food shares

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Speaker 1: so not as much as thirty one on the day.

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Speaker 1: Time out of check in with Michael Barr and get

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Speaker 1: the latest world and national headlines, Mike. Tens of thousands

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Speaker 1: of Horizon landline and cable workers in the East Coast

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Speaker 1: have walked off the job. They've been working without a

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Speaker 1: contract since August. Verizon spokesmen Rich Young, Our customers need

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Speaker 1: to know we are prepared for more than a year.

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Speaker 1: We've trained thousands of non union Verizon employees to sill

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Speaker 1: in for these For these employees who are going out

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Speaker 1: on strike, our non union workers will be employed in

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Speaker 1: our call centers, will be on the field making repairs.

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Speaker 1: More flights are being canceled at the International Airport in Brussels.

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Speaker 1: The airport is now dealing with an air traffic controllers strike.

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Speaker 1: Tensions over the issues of staffing and pensions have been

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Speaker 1: brewing for months. The strike comes after last month's deadly

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Speaker 1: bombing attacks at Brussels Airport. People in Columbia, South Carolina

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Speaker 1: will pack a Senate subcommittee hearing today on the bill

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Speaker 1: that would force transgender people to use public bathrooms based

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Speaker 1: on their biological gender. Global News twenty four hours a day,

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Speaker 1: powered by our twenty four hundred journalists and more than

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Speaker 1: a hundred fifty news bureaus from around the world. Not

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Speaker 1: Michael bar Thank you, Michael. Time now for the Bloomberg

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Speaker 1: NBC Sports update. Here's John Tesha. Thanks by another night

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Speaker 1: of quiet Met bats at City Field. Curtis Granderson let

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Speaker 1: off the game with a double, only five Measley singles

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Speaker 1: after that wasted. Another superb start from Noah Synderguarters struck

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Speaker 1: out twelve Miami broke an ain'tthenning tie off the Met

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Speaker 1: Bolton and one two to one. So four straight home

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Speaker 1: losses and in three of the four Mets have scored

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Speaker 1: a total of three runs. Jacob de Groam missing the start,

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Speaker 1: mental turned to Logan Barette trying to end this losing streak.

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Speaker 1: This afternoon, Yankees one in Toronto three to two. Brian

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Speaker 1: McCann tie the game of the home run the sixthing

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Speaker 1: Jacobe Elsberry put him ahead with the base hit in

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Speaker 1: the seventh. The story was the Yankee bullpen four hitless innings.

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Speaker 1: Michael Pineta on the Hill Tonight, it's finally over for

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Speaker 1: the nixt SO one O two ninety loss at Indiana

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Speaker 1: to finish the season thirty two and fifty. That's actually

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Speaker 1: fifteen more victories than last year, but they were twenty

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Speaker 1: two and twenty two went ted and twenty eight after that.

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Speaker 1: The big question now does coach Kurt Rambis get to

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Speaker 1: keep his job? Two big stories Tonight final game of

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Speaker 1: Kobe Bryant's career and Golden State host Memphis and the

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Speaker 1: Warriors when they finished seventy three and nine, best regular

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Speaker 1: season ever Hopully Night the Stanley Cup playoffs the Rangers

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Speaker 1: the last two years and made deep runs to the

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Speaker 1: Cup finals last year, the East Finals and along the

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Speaker 1: way both times they ended Pittsburgh season. But the Penguins

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Speaker 1: are red hot. Before dropping their last game, they had

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Speaker 1: won fourteen out of fifteen. With the Bloomberg NBC Sports update,

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Speaker 1: I'm John Stash, Thank you John. Futures are higher, They've

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Speaker 1: stabilized a little bit right now. S and P futures

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Speaker 1: up twelve point six tenths of eight percent, down features

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Speaker 1: up ninety four half a percent. Verizon hasn't started trading

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Speaker 1: it oh, just starting up one percent This is Bloomberg

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Speaker 1: Surveillance syn Michael McKee along with Tom Keane Premarket Trading

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Speaker 1: just starting for a Verizon their employees on strike. This morning,

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Speaker 1: the stock is up by one percent. JP Morgan reporting

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Speaker 1: better than forecast earnings. It's stock up two point seven percent,

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Speaker 1: even though revenue declined six point seven percent. Time now

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Speaker 1: for the Bloomberg and j I T Stem Report, brought

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Speaker 1: to you by the New Jersey Institute of Technology, investing

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Speaker 1: more than a hundred and ten million dollars a year

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Speaker 1: and applied research to solve problems and to improve life.

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Speaker 1: Learn more at Stories of Innovation dot M, j I

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Speaker 1: T dot E d U. Here's John Tucker. Well, let's

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Speaker 1: say see what's making news and science, technology, engineering and math.

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Speaker 1: This warning Michael Ali Baba Group Holding will be the

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Speaker 1: first Internet retailer to become a member of the largest

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Speaker 1: nonprofit global organization that fights counterfeit products and piracy. It's

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Speaker 1: all part of the Chinese company's efforts to shed its

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Speaker 1: image as a haven for chief brand knockoffs. Billionaire Shaun Parker,

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Speaker 1: the former president of Facebook, has given two hundred fifty

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Speaker 1: million dollars to create a research institute dedicated to developing

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Speaker 1: treatments that harnessed the immune system to combat cancer. The

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Speaker 1: park Are Institute for Cancer Immunotherapy will try to make

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Speaker 1: it easier for more than three hundred sciences from six

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Speaker 1: top cancer centers around the US to work together with

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Speaker 1: the drug companies. And in its first interview that when

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Speaker 1: his company was thrust in the spotlight and legal tussle

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Speaker 1: between Apple and US law enforcement over the hacking of

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Speaker 1: an iPhone, the chief executive officer, man Surrey Yaga Mucci

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Speaker 1: of cell Bright Mobile says his company wants to expand

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Speaker 1: its work countering tech savvy terrorists. He says he's willing

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Speaker 1: to spend as much as one million dollars to wire

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Speaker 1: or merge with companies to expand its sought after data

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Speaker 1: extraction business. That is this morning's Bloomberg and g I

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Speaker 1: t Stim report. Mike John Tucker, thank you very much. Well,

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Speaker 1: I need something to trade on today other than JP Morgan.

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Speaker 1: You can trade on Chinese trade data once again. China

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Speaker 1: driving global markets. Shanghai finishes up by one point four percent,

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Speaker 1: Tokyo by two point eight percent. Right now, the stock

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Speaker 1: six is up two u S futures Hire as I

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Speaker 1: mentioned as well, I've and having to do with investor

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Speaker 1: sentiment about China after the country reported that its exports

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Speaker 1: rose eleven and a half percent in dollar terms in

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Speaker 1: March from a year earlier. Uh, that is better than forecast.

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Speaker 1: Better than forecast. Our word of the day, Our phrase

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Speaker 1: of the day. Don Strathheim is a senior managing director

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Speaker 1: for China Research at ever Corps I s I UH

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Speaker 1: don um reports of the death of the Chinese economy

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Speaker 1: do seem to be exaggerated, Mike. They have been exaggerated.

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Speaker 1: Several months ago, there was this panic in the financial markets.

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Speaker 1: China was going to collapse. There's going to be some

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Speaker 1: sort of a currency crisis, apporn exchange crisis. It didn't

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Speaker 1: make any sense then. It doesn't make any sense. Now

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Speaker 1: the data is getting better. It's not great, but it's better. Well,

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Speaker 1: the data coming in, as you noted, on the high

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Speaker 1: side of mixed. Uh, they're expected to report that GDP

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Speaker 1: rose six point seven percent. That was their forecast, and

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Speaker 1: oddly enough, the Chinese always seemed to manage to hit

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Speaker 1: exactly their forecast. Even with these numbers. Today, how much

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Speaker 1: trust do we have in our ability to know what

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Speaker 1: the economy is actually doing there. Well, I think actually

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Speaker 1: not very much. The data is opaque on purpose. That

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Speaker 1: six point seven percent GDP number old data. Guys like me,

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Speaker 1: we look at it and say, fine, if that's the

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Speaker 1: total number, giving the components that add up to it,

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Speaker 1: and they either can't or won't give them to us,

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Speaker 1: that either means that there's something else that they're hiding,

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Speaker 1: or that the numbers are just really in some sense

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Speaker 1: made up. When we look at other independent data that

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Speaker 1: does not go through the National Bureau Statistics, we think

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Speaker 1: the growth number is materially below that six seven. But

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Speaker 1: when they set a target, they always meet it. When

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Speaker 1: when you see material below, what number would you put

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Speaker 1: on it? Well, a four percent number would be a

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Speaker 1: plausible number. And you could come to a number something

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Speaker 1: like that by arguing that old China heavy industry, manufacturing, construction, mining,

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Speaker 1: that's maybe half the economy, it's maybe it's dead in

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Speaker 1: the water, maybe zero, and the other half a new China,

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Speaker 1: the consumer sector services outside of consumers, business services, high

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Speaker 1: tech that could be as high as zero and eight

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Speaker 1: half and a half gives you a four percent number.

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Speaker 1: All right, Well, here's the key question, and I have

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Speaker 1: to ask, uh, the markets panic over not six point

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Speaker 1: seven You're saying it could be four, But what does

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Speaker 1: it mean for the rest of the world. I mean,

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Speaker 1: how bad is four percent or how good is six

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Speaker 1: point seven percent? In other words, does it does the

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Speaker 1: number matters? So much? Is what they're buying from everybody

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Speaker 1: else and what's the outlook there? The number really doesn't

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Speaker 1: matter that much. Nobody that I know of who is

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Speaker 1: a serious China analyst thinks that that six point seven

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Speaker 1: percent number is applausible, so that we can just kind

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Speaker 1: of throw that one h throw that one away. People

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Speaker 1: do try to get a general sense. I think they

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Speaker 1: have a fairly good sense that the economy is doing better, um,

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Speaker 1: not great, but better. So if China's growth for the

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Speaker 1: next few years is say four percent, make your guests

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Speaker 1: US uh maybe two uh, Europe and Japan maybe one.

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Speaker 1: If those numbers are somewhere close to right, China is

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Speaker 1: going to continue to be the growth driver of the world,

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Speaker 1: and it is going to be more important to investors

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Speaker 1: in America, Europe or China that China does well than

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Speaker 1: that even Europe, Japan, or the US do well. Don

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Speaker 1: Strasheim is with us from ever Corps, I s I

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Speaker 1: will continue our conversation or look at the Chinese economy

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Speaker 1: and how fast it's growing and what it means for

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Speaker 1: the rest of the world. It really does come down

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Speaker 1: to a lot of what they important is how other

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Speaker 1: people look at currencies and economies in Asia and around

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Speaker 1: the world. The better than forecast numbers today, pushing up

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Speaker 1: growth UH, pushing up the markets around the world. SMP

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Speaker 1: features up twelve points right now, the stock six up

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Speaker 1: by seven. This is Bloomberg Chavellant's son Bloomberg Radio. Bloomberk

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Speaker 1: Surveillance is brought to you by Mercedes Ben's outstanding offers

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Speaker 1: dot com for details. Today Global business news twenty four

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Speaker 1: mobile app and on your radio. This is a Bloomberg

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Speaker 1: Business Flash and I'm terring Moscow. These updates brought to

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Speaker 1: you by Sector Spider e t F. So why buy

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Speaker 1: a single stock when you can invest in the entire sector?

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Speaker 1: called on S six sector et f JP. Morgan Chase

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Speaker 1: is up two point seven percent in early trading, the

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Speaker 1: biggest US bank by assets, posting a first quarter profit

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Speaker 1: that beat Wall Street estimates on cost cuts at a

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Speaker 1: smaller decline in training revenue than most analysts predicted. U

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Speaker 1: S dock Indix futures are rising, indicating a second day

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Speaker 1: of gains for equities after better than forecast Chinese trade

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Speaker 1: data spoked US stoked optimism that the world's second biggest

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Speaker 1: economy is stabilizing. We checked the markets every fifteen minutes

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Speaker 1: throughout the trading day. On Bloomberg SNP E Many futures

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Speaker 1: up twelve points, DOWI mini futures up ninety eight, nastactivity

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Speaker 1: futures up thirty five. The decks in Germany's up two

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Speaker 1: point three percent. Ten year treasury down three thirty seconds,

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Speaker 1: the yield one point seven eight percent, yield on the

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Speaker 1: two year point seven five percent. Nimex screwed oil down

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Speaker 1: one and a half percent, or sixty four cents to

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Speaker 1: forty one fifty three of barrel comes. Gold down one

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Speaker 1: and a half percent or eighteen dollars thirty cents at

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Speaker 1: twelve forty two fifty announced the euro An dollar twelve

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Speaker 1: ninety nine, the en one oh nine points three eight,

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Speaker 1: and about thirty nine thousand lion line workers from Verizon

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Speaker 1: Communications largest labor unions began to strike after failing to

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Speaker 1: reach your gayment on a new contract with the phone

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Speaker 1: giant by a Wednesday morning deadline. And that's a Bloomberg

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Speaker 1: business flash. Tom and Mike, Karen, thanks so much, Good

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Speaker 1: morning everyone features up thirteen is Karen mentioned up uh

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Speaker 1: ninety nine on the down not your thro the level

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Speaker 1: some blue chips three m somebody mentioned out on Twitter.

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Speaker 1: I think went through out to a record high. Um

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Speaker 1: yesterday Donald's dress time with us with earned humility on

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Speaker 1: our myths and our certitudes about China. We're thrilled to

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Speaker 1: have them in our studio with the ever court, I

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Speaker 1: say to me, to me, what's always interesting, uh Dr

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Speaker 1: schas time is the idea of an absolute analysis versus

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Speaker 1: a relative analysis on a relative basis. How is China

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Speaker 1: doing versus it's a nation, it's adjacent nations on a

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Speaker 1: relative basis, there is no comparison. China is clearly the strongest.

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Speaker 1: Japan is stuck in the mud. Korea has got its

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Speaker 1: own Korea has its own problems. Uh. The Ascon countries

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Speaker 1: are doing okay, better than the than the developed world,

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Speaker 1: but not as well as China. That's likely to continue

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Speaker 1: to be the case. Are they tigers anymore They're not. Well,

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Speaker 1: that's a good point. The tigers probably are in South

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Speaker 1: Asia and uh maybe in Africa. Uh, if there's any

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Speaker 1: tigers at all? Interesting. Um, but I know Malaysia, Indonesia, Thailand. Uh,

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Speaker 1: these countries have have grown a lot and they're different

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Speaker 1: than they were. Can I rip up the script I'm

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Speaker 1: going to go on this. You pick it up with

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Speaker 1: Mr Strazem. Great news folks speaking of tigers, and a

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Speaker 1: major shoutout to um uh Julian Robertson and his support

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Speaker 1: of tigers at the Bronx Sioux. Mr Robertson and is

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Speaker 1: is lovely lovely um wife years ago did the talk

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Speaker 1: and initiated the talk on the conservation of tigers. And

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Speaker 1: we had that report yesterday from one of the wildlife

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Speaker 1: organizations at the count of tigers actually increased. And Juliet

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Speaker 1: Robertson did it when when it wasn't in there were

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Speaker 1: no rock stars holding concerts. Just say the elephants say

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Speaker 1: the tigers. Oddly enough, I was at the Bronx Zoo

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Speaker 1: on Sunday. Yeah, enough of that though. That was a

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Speaker 1: rip up the script. That was a extraordinary rip up

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Speaker 1: the script. Do stress, I'm from ever Car I s I.

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Speaker 1: I don't know if you know a lot about tigers

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Speaker 1: the animal, but the tigers the countries. Uh. We have

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Speaker 1: seen China have an outsize influence on markets, not just

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Speaker 1: equity markets, as you and I were talking about how

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Speaker 1: traders react sort of uh to to Chinese numbers, but

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Speaker 1: also on currency markets. Has forces the other currencies in

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Speaker 1: the region to adjust. And in commodities markets, you said

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Speaker 1: before the break they're growing four percent, not six point

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Speaker 1: seven percent probably, So what does that mean for commodities

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Speaker 1: If two months ago somebody said they were growing four percent,

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Speaker 1: then you know every commodity trader would have jumped out

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Speaker 1: of the window as well. Well. I think the uh

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Speaker 1: the key is to remember that China is in some

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Speaker 1: ways like Japan was, that is a a a giant factory.

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Speaker 1: They import raw materials, commodities from all over the world.

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Speaker 1: They put them in their manufacturing engine, turn the crank,

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Speaker 1: and they sell products that you and I buy in

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Speaker 1: Walmart or whoerever Um. They are by far the biggest

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Speaker 1: consumer of most of these hard commodities. Uh, it's legendary.

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Speaker 1: Now everyone knows that the sealed industry is flat on

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Speaker 1: its back. It's far out of equal to room. Will

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Speaker 1: be years and years, not months or quarters before it

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Speaker 1: recovers um and China is the biggest driver of that.

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Speaker 1: All this excess capacity. They're not going to shut it

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Speaker 1: down quickly. So this is a disequel everything that will

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Speaker 1: take a long time. So they're still gonna be ryan

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Speaker 1: stuff and proppiting up prices even if they don't need it. Uh.

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Speaker 1: The state owned enterprises in China, the big ones in

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Speaker 1: the big industries, are not profit maximizers. They're primarily employment agencies.

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Speaker 1: And so now they're talking about all this sm we reform.

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Speaker 1: I think this is much more talk than reality. What

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Speaker 1: are you gonna do with a fifty two year old

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Speaker 1: steel worker who's been working in the steel mill in

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Speaker 1: China for thirty years? Uh, you don't need him. It's

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Speaker 1: a zombie company. He's not going to get hired by

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Speaker 1: bay Do. He's done, and so he can either get fired.

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Speaker 1: Be sitting on this on the curb. You're gonna have

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Speaker 1: to pay him for something something that's not gonna work

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Speaker 1: very well. You could have him still employed at the

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Speaker 1: steel mill, sitting in the lunch room, not making steel

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Speaker 1: that doesn't work very well. Or you could have him

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Speaker 1: still make steel for which there is no demand, and

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Speaker 1: you stack that steel up in the back lot with

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Speaker 1: a puple over it, or you dump it on the

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Speaker 1: other global markets. So there are no easy solutions here.

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Speaker 1: This is the dilemma. I look at the dilemma of it,

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Speaker 1: and as you say, no easy solutions, as we go

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Speaker 1: to I m F meetings, what will be the Chinese stance?

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Speaker 1: Is there a I'm speaking as an amateur, as you're

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Speaker 1: the pro is there a traditional Chinese reticence to engage

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Speaker 1: in the international relations and economics of the moment? Or

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Speaker 1: is there a new China that wants to be part

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Speaker 1: of the dialogue. Well, they want to be part of this,

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Speaker 1: it's a good question, Tom, they want to be part

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Speaker 1: of the dialogue um, but they are going to I think, uh,

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Speaker 1: listen politely and go their own way. The idea of

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Speaker 1: an accord um between China and some of the others

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Speaker 1: is just doesn't really make any sense, because that accord

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Speaker 1: means giving up some of your discretion. They don't want

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Speaker 1: to do that. And and my this alludes to Robert

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Speaker 1: phil Been of Morgan Stanley the other day saying, we

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Speaker 1: forget with Japan and obonomics. What a domestic debate they're

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Speaker 1: supposed international economics is, particularly as they go to an election.

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Speaker 1: I believe it's in July. A lot of people concerned

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Speaker 1: about the Chinese financial system. On a day when US

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Speaker 1: banks start to release their earnings, how bad is shape

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Speaker 1: our China's banks in and and and how long can

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Speaker 1: they keep them going? They're in bad shape, but they

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Speaker 1: m They were the big four state owned banks in China,

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Speaker 1: half the market to half the banking market. They were

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Speaker 1: carved out of the Ministry of Finance in China nineteen

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Speaker 1: ninety not to make loans to you and I or

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Speaker 1: to our companies, but to make loans to other big

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Speaker 1: stay and enterprises in oil and shipping and telecom and whatever.

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Speaker 1: That was and remains their role. China loves the idea

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Speaker 1: that they are state owned. That's one of their power

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Speaker 1: tools devices. And if you ask the Chinese about the

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Speaker 1: O eight oh nine meltdown or the current situation. They say, uh,

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Speaker 1: state run financial system, manage currency and capital controls. Those

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Speaker 1: are the items they're not gonna give back. Um. A

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Speaker 1: lot of the debt in China is internal, not some

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Speaker 1: of it is extra, but not much. So there's a

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Speaker 1: lot of insulation that many of the banking systems around

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Speaker 1: the world don't have. Well, could they have a banking

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Speaker 1: crisis as as we had, They wouldn't have a banking crisis,

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Speaker 1: uh like we had. But um uh any kind of

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Speaker 1: real serious banking problem in China would inflict damage not

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Speaker 1: only on China but around the world as well. Because

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Speaker 1: they're a giant player. Would they just monetize that uh

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Speaker 1: to to sweep it under the road? Between two thousand

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Speaker 1: four and two thousand nine, they executed uh kind of

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Speaker 1: good bank bad bank transactions in preparation for the I

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Speaker 1: p O s of the big four state owned the banks.

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Speaker 1: Took the bad loans off the book, put them in

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Speaker 1: their back pocket in Beijing, or basically wrote a check

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Speaker 1: from the Ministry Finance to replace that capital said now here,

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Speaker 1: go back to your business. Being a state owned bank,

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Speaker 1: they could do something analogus to that again, and if

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Speaker 1: they needed to, they would what's the state of investment?

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Speaker 1: Just quickly here done? Unfortunately, no time. What's the what's

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Speaker 1: the state of investment? Uh? In China? Is there a

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Speaker 1: new rule of law that is for greater confidence in JVS? No? No,

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Speaker 1: The simple answer is there is not. It is still

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Speaker 1: too much opaque. One of the reasons there is not

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Speaker 1: much inbound capital is but they would like to have

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Speaker 1: is that people don't have any confidence. I don't. I

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Speaker 1: think that is going to take a long time to resolve.

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Speaker 1: That's stress and thank you so much, very very strong,

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Speaker 1: as well as the record I s I and a

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Speaker 1: major shout out. We do a shout out always when

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Speaker 1: somebody actually reads Jonathan Spence is uh the Making of

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Speaker 1: Modern China? Cover to cover every word? Major shout out

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Speaker 1: to Colby Smith, who's gotten through all fourteen thousand ages

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Speaker 1: of Jonathan Spences one volume Classic Dance Dress. I'm on China.

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Speaker 1: We'll begin another hour of Bloomberg Surveillance. Please stay with

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Speaker 1: his futures up twelve